LPI rises on 27 sen dividend, profit growth

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KUALA LUMPUR (July 16): LPI Capital Bhd shares rose as much as 16 sen or 1% to RM16.22 in morning trade today after the general insurer declared yesterday a dividend of 27 sen a share and reported growth in second quarter net profit.

At 10:41am today, LPI's share price was up 14 sen at RM16.20 with 14,600 shares traded. The counter was among Bursa Malaysia top gainers.

Yesterday, LPI declared its first interim dividend of 27 sen per share, payable on Aug 8 this year. The dividend's ex-date falls on July 29, according to LPI's Bursa filings.

LPI also announced that net profit increased to RM70.78 million for the second quarter ended June 30, 2019 (2QFY19) from RM65.74 million a year earlier. This brings 1HFY19 net profit to RM147.94 million from RM138.24 million a year earlier.

Today, MIDF Amanah Investment Bank Bhd analyst Khoo Zhen Ye wrote in a note that LPI's 1HFY19 core profit grew 4.6% on-year to RM146.2 million, accounting for 44.3% and 43.9% of MIDF and consensus' full-year FY19 estimates.

Khoo said LPI's RM146.2 million core profit came in within MIDF's expectation.

The analyst maintained MIDF's "neutral" call on LPI shares with an unchanged target price of RM16.20.

"While the group's earnings momentum remains resilient, we remain cautiously optimistic of its growth prospects given the escalating competition in the general insurance segment due to the motor and fire liberalisation exercise.

"Nonetheless, the resumption of some government infrastructure works and improved domestic economic conditions coupled with the group's prudent underwriting practices would partially support it to weather the structural change in the industry," the analyst said.