|  | 

Government & Politics

AKD Quotidian about —: AICL: 1HCY11 Result Preview

Karachi: Adamjee Insurance Company Ltd (AICL) is scheduled to finalize its 1HCY11 result tomorrow.

According to AKD Securities, they expect the company to post NPAT of PkR548mn (EPS: PkR4.35) in 1HCY11 against NPAT of PkR299mn (EPS: PkR2.41) in 1HCY10, translating into a robust growth of 80%YoY. Alongside the result, AICL is expected to announce a first interim dividend of PkR1.50/share. While net underwriting is expected to be up 14%YoY and AICL has clearly focused on admin cost control, the bulk of projected growth should be driven by a strong increase in investment income (low base last year + some Pakgen gains). This should compensate for a likely higher claims ratio (66% in 1HCY11E vs. 64% in 1HCY10). AICL has shed 26%FYTD to trade at an attractive forward PER of 5.6x (annualized 1HCY11E) which, in AKD Securities’ view, both limits further downside and offers a good investment opportunity considering full-year CY11F profits may end up 2x of CY10 profits. At current levels, AKD Securities’ target price of PkR75/share implies a Buy stance. That said, AKD Securities will look to revisit AKD Securities’ investment case post release of detailed 1HCY11 accounts.

Profit and Loss Account

 

(PkRmn) 1HCY11E 1HCY10 YoY 2QCY11E  IQCY2011 QoQ
Net premium revenue  3,865  3,431 13% 1,880 1,985 -5%
Net claims 2,562 2,187 17% 1,250 1,312 -5%
Expenses 589  602  -2% 298 291  2%
Net commission 263 250 5% 132 131 0%
Underwriting result 450 392 15% 200 250  -20%
Investment income 398 223 78% 200 198 1%
Rental Income 0 1 -54%  0 0 0%
Other Income 74 71 3%  38 36 7%
Total Income 923 688 34%  438 484 -9%
General & Admin 244 291  -16% 128 116 10%
NPBT 671 386 74% 307 365 -16%
NPAT 538 299 80% 249  289 -14%
EPS (PkR) 4.35 2.41 80% 2.02 2.33 -14%
Claim Ratio 66% 64%  67% 66%    
Expense Ratio 15%  18% 16% 15%    
Combined Ratio 82%  81% 82% 81%    
Source: Company Reports & AKD Research

 

 

Investment Perspective: Since the FY12 Budget, which did not contain the expected concessions on capital gains tax, AICL has shed 28% (17% underperformance vs. the Index). Going forward, while the KSE-100 Index has shed 26%FYTD which may depress sequential investment income, AKD Securities expects AICL to post strong YoY growth in 2HCY11 as last year’s profitability was affected by the Aug10 floods (abnormally high claims). Based on annualized 1HCY11E profits, AICL trades at a forward PER of 5.6x. While AKD Securities’ target price of PkR75/share implies a Buy stance, AKD Securities will look to revisit AKD Securities’ investment case post release of detailed 1HCY11 accounts.

akd-quotidian-about-%e2%80%94-aicl-1hcy11-result-preview

ABOUT THE AUTHOR

POST YOUR COMMENTS

About Us

Yes, it is true that the Business Observer does what its name reveals, means covering the news from all the industries, which are putting their efforts into accelerating the economy of Pakistan. The website is the trustworthy business news website and its name is taken among those business websites of Pakistan.

Monthly Archives