Allianz Malaysia - Outperformed Expectations; Higher 4Q20 Net Profit

Date: 25/02/2021

Source  :  AffinHwang
Stock  :  ALLIANZ       Price Target  :  16.40      |      Price Call  :  BUY
        Last Price  :  12.64      |      Upside/Downside  :  +3.76 (29.75%)

  • Allianz saw a 4Q20 net profit of RM144m (+8.2% yoy; +11.6% qoq), largely due to a lower effective tax rate while at the pre-tax profit level, it was flat yoy and down 7.6% qoq due to weaker performance at the Life unit
  • 2020 results outperformed our and consensus estimates by 9.5%. The General unit did better in 2020 due to savings in motor claims while the Life unit was impacted by higher insurance contract liabilities and claims
  • Maintain BUY, with 12-month Price Target of RM16.40 unchanged. Prospects continue to be underpinned by a recovery in business activities and its strong agency force and partnerships

2020 Net Profit Rose 5.7% Yoy Partially Underpinned by a Strong 4Q20

Though Allianz saw a stronger 4Q20 net profit (+8.2% yoy and +11.6% qoq), it was aided by a lower effective tax rate as the pre-tax profit level remained flat yoy and was down 7.6% qoq. The General unit reported a favourable 4Q20 underwriting profit due to lower net claims (from the motor policies) subsequent to the reinstatement of the MCO. Meanwhile, the Life unit saw pre-tax profit down 45% qoq and 25% yoy in 4Q20 due to higher insurance contract liabilities and provision for claims. For 2020, the impact of the MCO/CMCO did not hurt Allianz’s business badly, as the contraction in the 2Q20 gross written premium (GWP) was subsequently clawed back in 3Q-4Q20, with the overall GWP up 7.8% yoy (General: +7.2% yoy; Life: +8.2% yoy). At the group level, the overall net claims and reserve ratio declined to 72.5% in 2020 vs. 78.2% in 2019, given lower claims from the General unit. Allianz also saw more favourable net investment results and realized gains in 2020 (+9.7% yoy) though these were offset by lower fair value gains (-88.3% yoy).

Premium Growth Expected to Stay Resilient in 2021

In 2021, we believe that prospects in the General segment will be driven by a recovery in auto sales and through the Pos Malaysia tie-up while annualized new premium growth in the Life segment (2020: +13.5% yoy) will be led by its strong agency force and banca-partnership, as well as the pick-up in traditional policy sales.

Maintain BUY, With PT Unchanged at RM16.40

We reiterate our BUY rating on the stock, with an unchanged Price Target of RM16.40, based on these key assumptions: a 2021E P/BV target of 1.55x for its General operations and 2021E P/EV target of 1x for its Life operations. We raised our 2021E-22E earnings forecasts by 3.7% and 7.7%, respectively, as we relooked at certain assumptions such as claims, overheads and investment income. On GWP, we are forecasting a 5% yoy growth for 2021-23E. Downside risks: i) high inflation costs; ii) theft and fraud cases; and iii) more competitive rates from peers.

Source: Affin Hwang Research - 25 Feb 2021

Share this

Related Stocks

Chart Stock Name Last Change Volume 
ALLIANZ 12.64 0.00 (0.00%) 88,900 

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View Trading Signals and run Live Backtest
MQ Affiliate
Earn rewards with MQ Affiliate Program

458  282  556  1614 

Top 10 Active Counters
 SMTRACK 0.16-0.005 
 AHB 0.13+0.025 
 HSI-CI9 0.125-0.045 
 DNEX 0.935+0.015 
 TOPBLDS 0.015-0.02 
 OPCOM 1.05+0.05 
 VINVEST 0.450.00 
 SENHENG 0.825-0.045 
 MYEG 0.95+0.02 
 HIBISCS 0.95-0.02