Kurnia Asia falls after sale of insurance unit

KUALA LUMPUR: Shares of Kurnia Asia Bhd remained in the red on Friday following the lack of any positive catalysts after it disposed of its insurance unit to AMMB's subsidiary AmG Insurance Bhd (AmG) for RM1.55 billion.

At 2.59pm, it was down two sen to 60.5 sen. There were 13.61 million shares done at prices ranging from 59.5 sen to 63.5 sen.

On Thursday, Kurnia Asia announced it had a conditional sale and purchase agreement with AmG to proceed with the sale of Kurnia Insurans (Malaysia) Bhd (KIMB).

OSK Research said assuming KIMB's valuation was completed based on its latest book value as at Dec 31, 2011, the purchase consideration would be adjusted upwards to RM 1.59 billion, at 2.05 times price-to-book value.

“Incorporating this book value into our valuations would bump up our fair value for the stock from 77 sen to 82 sen,” it said.

OSK Research said the 2.0 times price-to-book value was fair if compared with recent transactions in the insurance industry.

“We gather from management that shareholders can expect a dividend distribution but added that it is also actively exploring other potential businesses to invest in, in addition to growing its existing general insurance businesses in Indonesia and Thailand organically or via other growth strategies,” it said.