Morning Briefing for December 18, 2013 – Standard Capital

Karachi, December 18, 2013 (PPI-OT): Insurance sector PE exposition

The general insurance segment in Pakistan goes with the economy. Considering the fact that now industrial sector may really take-off, KASB Securities Limited sees underwriting profits of big companies to increase.

According to Standard Capital, however, these companies still bank on investment income wherein returns from stock market forms the core part. Most of the companies are vying for reforms since there is tough competition for core premium earnings among players in general and marine business.

Standard Capital is presenting some options in the segment for investor consideration:

Company Name                            Expected        PBV         Dividend       ROE
                                              PE                       Yield

United Insurance                           3.9          0.9            0.0         16.3
Adamjee Insurance bonus adj                4.1          0.4            6.7          5.4
Pak Reinsurance                            5.5          1.2            9.3         16.8
Century Insurance Company                  5.8          0.7            7.9         11.4 
Reliance Insurance                         6.0          0.5            0.0         15.1
Habib Insurance Rs 5/sh par                6.6          1.6           11.8         20.3
Askari General Inusrance                   8.3          1.3            0.0         14.8
TPL Direct Insurance                       8.6          1.1            0.0         11.0
Atlas Insurance Limted                     9.2          3.4            6.4         30.3
Jubilee General Insurance                  9.8          2.3            4.4         20.3 
EFU Life Assurance                        11.2          3.6            7.1         43.7
EFU General Insurance                     12.4          1.0            5.8         14.4
Jubilee Life Insurance                    25.6         10.7            1.4         30.8
IGI Insurance                             27.4          1.7            1.9         -4.1
PICIC Insurance                           29.6          1.1            0.0        -11.7

Source: www.scstrade.com

Former insurance company bracketed in this segment
Cyan Limited                               3.7          0.9            5.4         32.0

Source: www.scstrade.com
Standard Capital sees Adamjee Insurance – biggest private sector insurance company, still attractive even after the adjustment of hefty bonus of 182.93% and deciphering PE of 4x. Standard Capital expects CY13 adj. earnings could reach Rs 8.45/sh.

Among others Standard Capital sees value in evergreen Pakistan Reinsurance – biggest reinsurer (which too could be on a privatization list; foreign strategic stake has also been accumulated). PAKRI deciphers PE of 5.5x. The biggest government life insurer holds major stake in PAKRI and always look for dividend income and hence Standard Capital sees dividend yield of 9%.

Standard Capital also likes Century Insurance which spells PE of 5.8x. CYAN is a former insurer and currently holds beneficial ownership in HUBC.

The post Morning Briefing for December 18, 2013 – Standard Capital appeared first on AsiaNet-Pakistan.

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