RHB keeps ‘buy’ on LPI’s from going strength to strength

RHB keeps ‘buy’ on LPI’s from going strength to strength
Business & Markets 2013
Written by Charlotte Chong of the edgedaily.com
Friday, 15 March 2013 09:40


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KUALA LUMPUR (MAR 15): RHB Research Institute Shd Bhd has retained a ‘buy’ rating on LPI CAPITAL BHD [] on the back of its robust business, strong underwriting strength and attractive dividend yields.

The research house has maintained a ‘buy’ rating at RM15.75 with the same target price, pegged to a 19.4 times of its financial year 2013 earnings per share.

RHB said in a note Thursday, LPI was trimming its risk exposure on lumpy contracts, including its engineering insurance to mass rapid transit (MRT) project, its subsidiary Lonpac also plans to stay prominent in fire and other non-motor segments to sustain premium growth.

“LPI has ceded most of its risk exposure to reinsurers, we estimated that the net risk is 0.01% lower of the total insurance exposure to MRT projects,” it said.

LPI has general insurance as its core business, which is carried out by its unit Lonpac Insurance Bhd.

RHB Research said: “It is worthy to note that Lonpac is now ranked second in four general insurance segments.”

The group seeks to diversify its bank partnerships having now Public Bank as its main source of premium contributions from bank partnerships.

Lonpac is also in the panel of insurers for United Overseas Bank, Bank of China and the Industrial and Commercial Bank of China.

Meanwhile, Lonpac expects to continue relying on its agency force to boost premiums growth, hoping to grow its agent numbers by about 15%.

Moving forward, the group plans to grow its market share and continue being a dominant player in its strongest segments.