Friday 29 Mar 2024
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KUALA LUMPUR (Oct 16): Affin Hwang Capital Research has downgraded LPI Capital Bhd to “Hold” at RM15.48 with a lower target price of RM15.90 (from RM18.90) and said LPI Capital’s 9M19 net profit (RM235.7 million, +2.4% y-o-y) came in below expectations, accounting for only 68% of house 2019E net profit of RM344.9 million.

In a note today, the research house said though LPI’s net profit improved by 24% q-o-q (due to higher investment gains and improved underwriting profits), the recovery is not significant enough to meet its full year expectation due to the persistently high claims, commission and management expenses.

“Comparatively, 9M19 combined ratio rose to 72.5% against 69.3% in 9M18 and had resulted in a marginal decline of 2.6% y-o-y in 9M19 underwriting profit.

“We are revising down our 2019E-22E net profit by 6.9-9.0% as we raise the group claims ratio to 43-44%.

“Downgrade to Hold (from Buy), with a revised target price of RM15.90,” it said.

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