Kelly Partners recently announced a partnership with AUB Group ((AUB)) to provide insurance broking, accounting and tax services to clients of both parties. Business will be conducted via a new 50%/50% owned venture named 'Austbrokers Kelly and Partners'.

This JV will provide general and life insurance broking services to KPG clients. In time (circa five years), KPG expects to achieve penetration of around 30% of its 8,000 clients, which would result in around $2m earnings (EBIT) to the JV.

Further opportunity exists via potential acquisitions (in the JV) and potential referral agreements.

Morgans highlights Kelly Partners recently announced strong first quarter result. This was considered driven by a combination of increased profit share of operating businesses and a reduction in parent operating expenses.

The broker makes material (circa15%) EPS upgrades across the forecast period.

The Add rating is maintained. The target price is increased to $1.88 from $1.26.

Sector: Commercial & Professional Services.

Target price is $1.88.Current Price is $1.65. Difference: $0.23 - (brackets indicate current price is over target). If KPG meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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