Smartgroup Overvalued as Market Underestimates Potential Drawbacks

Smartgroup provides employee management services, with salary packaging, novated leasing, fleet management, and software solutions the key offerings. Together with McMillan Shakespeare, it is an oligopoly in Australia’s salary packaging market, and has a sizable presence in the novated leasing market. Entities in the government, healthcare, not-for-profit, and education industries make up 97% of Smartgroup’s client base. These industries are defensive, typically comprise of low to middle class workers, and have favorable fringe benefits tax, or FBT, exemptions. They are regular users of Smartgroup’s services, and underpin the firm's steady revenue.