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Wednesday, February 26, 2014

MPHB Capital - Deeply discounted asset play


FY13 results in line, reported results are just for 9 months.

MPHB Cap continues to be a deeply-discounted asset play with valuable land bank.

SOP-derived TP of MYR2.42 maintained. The MPI sale could lift our SOP by another 23 sen to MYR2.65; BUY.
What’s New

MPHB Cap’s FY13 results were within expectations - to note that the group reported results for just nine months. Multi-Purpose Insurans (MPI), which contributed to 78% of group earnings, saw net earned premiums (NEP) rise 14% YoY and positively, its claims ratio was stable at 59.7% (59.8% in FY12). Motor NEP increased 14% YoY and accounted for 44% of total NEP while fire NEP made up 16%. MPI’s combined ratio worked out to be 92.6% in FY13, an improvement over 93.8% in FY12. Group earnings included about MYR5m profit from its completed Minden Heights property project.
What’s Our View

Our forecasts assume 11% NEP growth in FY14 with the motor class as the key driver. We have also assumed a combined ratio of 93%. The group’s joint-venture property development projects, in which it shares 22% of the profits, are expected to kick off with the Rawang project in mid-2014; we have yet to factor in contributions from this development.

The sale of the Balik Pulau land will contribute to an exceptional profit of MYR194.6m, or 27sen per share, which we have already factored into our SOP.

We expect the sale of a 49% stake in Multi-Purpose Insurans (MPI) at an assumed P/BV of 2.2x to lift our SOP by another 23 sen to MYR2.65 (+10%). We remain upbeat on MPHB Cap as a deeplydiscounted asset play – there is still much valued to be unlocked from its 2,700 acres of land bank – BUY.

Source: Maybank Research - 26 Feb 2014

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