Affin Hwang downgrades LPI to ‘Hold’, cuts TP to RM15.90

KUALA LUMPUR: Affin Hwang Capital research has downgraded LPI Capital Bhd to a hold rating and lowered its target price to RM15.90 from RM18.90 previously as its 9M19 net profit missed expectations.

“We are revising down our 2019E-22E net profits by 6.9%/9.0%/9.0% as we factor in a higher net claims ratio assumption of 43-44% from 38-39%, driven by higher claims from the MAT (marine, aviation and transport) and miscellaneous segments,” it said in a note.

For the period, the insurer’s net profit came in at RM2354.7mil, which was 2.4% higher year-on-year and up 24.1% quarter-on-quarter, but accounted for only 68% of Affin Hwang’s full-year estimate.

LPI’s topline growth was no sufficient ti offset the growth in claims and expenses, resulting in a 2.6% yo-y decline in underwriting profit.

“For the period, LPI saw higher net claims incurred (9M19 +20% yoy), higher net commission expenses (+26.5% yoy) while management expenses were up 5.5% yoy,” said the research house.

Source: TheStar