MIDF Research starts coverage on LPI Capital, target RM13.18

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KUALA LUMPUR (March 20): MIDF Research has initiated coverage on LPI Capital Bhd at RM14.87 with a “Neutral” rating and target price of RM13.18, pegging the stock to a forward PER of 19.1x on FY15F EPS of 69.2 sen.

In a note Friday, the research house said the forward PE multiple of 19.1x is a premium compared to the sector’s average of 15.4x.

“We believe this is justified based on LPI’s: (i) solid and proven track record, (ii) prudent underwriting practice, (iii) strong agency network and relationship with Public Bank, and (iv) strong CAR of close to 300%

“Our Neutral rating is premised on the defensive qualities of the stock have been priced-in while the share price has already surged +20% since late January this year after its announcement of 1-for-2 bonus issue to boost its liquidity.

“We expect dividend payouts of close to 70% of its PAT for FY15 and FY16. This will translate into a decent dividend yield of 3.4% for both FY15 and FY16,” it said.