Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Prudential. We currently have 40 research reports from 4 professional analysts.
The new Prudential has no European business. It will exclusively be focused on Asian and US operations. The UK business was listed separately. Without the mature markets, the growth potential of Prudential is important in Asia, boosted by the low penetration rate. In the US, and after two years of adaptation to the new regulatory framework, the business should benefit gradually from its diversification strategy.
Prudential announced an operating profit of £2,024m (up 14% like-for-like and 21% as reported) for its continuing operations, excluding M&GPrudential. Even the profitability of the “new” Prudential is driven by Asian operations. The demerger of the group is expected to be completed in Q4 19.
M&GPrudential announced its strategy a few months before the expected split of the insurer. The insurer will be structured into business units: Savings & Assets management and Heritage. While a development strategy will be implemented in the first BU, the large With-Profit business of the Heritage unit will be closed to new customers and managed by a specialised company (Diligent). The earnings and the capital position of M&GPrudential are likely to be fragile and would depend on the updates for longevity assumptions.
Prudential announced operating profit of £4,827m (up 6% lfl) and net profit at £3,013m (up 30% lfl). Like other UK Life insurers, Prudential benefited from new longevity assumption changes (£441m). The Asian business was the major contributor to earnings (c. 38%) as the US operations were hit by equity market movements. The demerger process is progressing well. The insurer announced African acquisitions in Cameroon, Ivory Coast and Togo, but we do not expect a significant impact on the group’s figures.
Prudential announced operating profit of £2,405m (up 9% lfl). All business units posted improved earnings: +14% for Asia (£1,016m), USA (+2% to £1,002m) and M&G Prudential (+4% at £778m). The planned demerger of M&G Prudential from the group, which will result in two separately-listed companies, is progressing well. The insurer’s status of a good dividend payer is confirmed with an interim dividend of 15.67p/share, up 8%.
Prudential announced operating profit of £4,699m (up 6% lfl) and net profit at £2,390m (up 24% lfl). It also announced a major event: the demerger of M&G Prudential from Prudential plc. to focus on regions with extreme rapid growth. M&G will have the opportunity to improve its profitability through more control over its capital allocation. The insurer’s status of a good dividend payer should be kept thanks to the cash generated by the retained businesses.
Prudential’s 9M 17 Life new business profit increased by 17% to £2,469m. The Asian business posted a growing new business profit increase of 15% lfl (up 24% as reported) to £1,616m. APE sales increased by 5% (up 14% as reported). Eastspring AuM reached £44.3bn. In the USA, Jackson’s new business profit increased by 17% (up 28% as reported) to £619m. In the UK & Europe, M&G Prudential delivered external asset management net inflows of £9.9bn. In addition, continued demand for risk-managed solutions has driven life insurance APE sales growth of 25%, with new business profit up 31% to £234m. This includes APE sales growth of 32% from PruFund-backed products, which generated net inflows of £6.6bn. M&G Prudential’s total AuM increased to £336bn. The estimated group shareholder Solvency II surplus at 30 September 2017 was £12.8bn, equivalent to a cover ratio of 201%.
Prudential announced an IFRS operating profit of £4,256m, up 7% at AER (-2% at CER) relative to 2015. The major contributor to operating profit is the US division (£2,030m), while the Asian and UK businesses stood at £1,644m and £828m, respectively. EEV new business profit grew by 18% to £3,088m: £2,030m (+18% yoy) from Asia, £790m (-2% yoy) from the US and £268m (+33% yoy) from the UK. APE sales increased by 16% to £6,320m, led by Asia (+33% yoy at £3,599m) and the UK (+33% yoy to £1,160m). In the US, APE sales were 10% lower at £1,561m. M&G assets under management rose to £264.9bn. Eastspring Investments delivered a strong performance and assets under management stood at £117.9bn vs. £89.1bn in 2015. The group’s underlying free surplus generation increased by 18% to £3,588m and cash remitted by business units rose by 5.7% to £1,718m. As at 31 December 2016, the Solvency II ratio reached 201%. The board has decided to increase the full-year ordinary dividend by 12% to 43.5p per share (final dividend of 30.57p per share).
Prudential is recovering on markets with a 3-month performance of more than 7%. Despite the sharp decrease in H1 16 EPS (-52% to 26.9p), IFRS operating profit is positive with a 6% decrease at CER to £2,059m. EEV new business profit grew by 8% to £1,260m. The group’s underlying free surplus generation increased by 13% to £1,609m and cash remitted by business units rose by 5% to £1,118m. Regarding the performances of the business units, the British insurer continued to perform well in the US market, focusing on variable annuities with an operating profit of £888m. In the UK, there was a 51% improvement in APE sales to £593m. Operating profit increased by 8% to £473m. In asset management, M&G experienced net outflows of £6.9bn, but operating profit decreased by 10% to £225m and cash remitted remained stable at £150m. Asia has delivered an operating profit of £743m, +15% yoy. At Eastspring, external net outflows of £244m and positive market movements have driven total FuM to a record level of £105bn, +5% yoy. The Group Solvency II surplus is estimated at £9.1bn, equivalent to a ratio of 175%.
Mixed messages from UK and EU governments already highlight a potential for on-going political risk, with any sector volatility accentuated by Solvency II. With significant value in the sector we would look to now buy shares with strong fundamentals to be confirmed by upcoming results.
Companies: ALV CS PRU LGEN PHNX
We have repositioned the portfolio, price targets and ratings to allow for accentuated regulatory risk from on-going capital market volatility.
Companies: AGN ALV AV/ CS G LGEN PHNX PRU ZURN SLA
Prudential announced an IFRS operating profit of £4,007m, up 22% at CER. The major contributor to operating profit is the US division (£1,691m), while the Asian and UK businesses stood at £1,209m and £1,167m, respectively. EEV new business profit grew by 20% to £2,617m. All business units contributed to this growth, with £1,490m (+28 yoy) from Asia, £809m (+8% yoy) from the US and £318m (+23% yoy) from the UK. APE sales increased by 17% to £5,607m, led by Asia where APE sales were 26% higher at £2,853m. In the US, APE sales were 3% higher at £1,729m as demand for variable annuities remained strong. In the UK, APE sales grew by 23% to £1,025m. M&G experienced net outflows of £7bn vs. net inflows of £7.1bn in 2014. However, Eastspring Investments delivered a strong performance with third-party net inflows of £6bn. The group’s underlying free surplus generation increased by 15% to £3,050m and cash remitted by business units rose by 10% to £1,625m. As at 31 December 2015, the IGD surplus was estimated at £5.5bn and the Solvency II ratio stood at 193%. The board has decided to increase the full-year ordinary dividend by 5% to 38.78p per share (final dividend of 26.47p per share). In addition, the board has decided to award a special dividend of 10p per share.
We expect a solid set of results next week, with the Asian businesses demonstrating the resilience of Prudential’s distribution and product model in the region in the face of market volatility. We reduce our price target in line with the rest of the sector, however, we retain out BUY rating.
Prudential recorded 9M 15 new business profit of £1,764m, +13% on a CER basis (+17% on an AER basis). Double-digit growth was also observed in new business APE sales in Life insurance in Asia (+27% to £2,021m) and the UK (+26% to £613m), however there was a 5% decline in the US to £1,278m. In Asia, new business profit increased by 24% to £976m at CER (+26% at AER), driven by APE sales growth. For Q3, APE sales increased 20% to £655m. Concerning the asset management business, Eastspring Investments saw an 18% increase in FuM to £82.4bn in the 9M. In the US, separate account assets were up 4% to £84.1bn. Jackson delivered new business profit of £557m (-4% on CER but +5% on AER). The UK business posted a 16% increase in new business profit to £231m during the 9M 15. Note that Prudential continues to develop businesses in Kenya, Ghana and Uganda and has announced long-term bank distribution agreements with Fidelity Bank in Ghana and Standard Chartered in Kenya in August 2015 to complement its fast-growing agency forces. In asset management, M&G’s retail business continued to experience net outflows of £2.7bn in Q3. Retail net outflows in the 9M reached £7.3bn vs. inflows of £5.3bn in 2014. M&G’s institutional business generated £1.2bn of net inflows in Q3, resulting in cumulative net inflows of £2.3bn ytd. Overall, total M&G FuM reduced to £247.5bn from £257.3bn in 9M 14 due to net fund outflows and negative market movements. As at 30 September 2015, the IGD surplus was estimated at £5.1bn, equivalent to a cover ratio of of 2.5x. In preparation for Solvency II, Prudential submitted its internal model applications to the Prudential Regulation Authority and received Matching Adjustment approval. The approval process is expected in December 2015.
Prudential announced an IFRS operating profit of £1,881m in H1 15, up 17% at CER. EEV new business profit grew by 12% to £1,190m. The group’s underlying free surplus generation increased by 12% to £1,418m and cash remitted by business units rose by 10% to £1,068m. Regarding the performances of the business units, the British insurer continued to perform well in the US market, focusing on variable annuities with an operating profit of £834m. In the UK, there was a 25% improvement in APE sales to £393m, despite lower sales of retail annuities. Operating profit increased by 19% to £436m. In asset management, M&G experienced net outflows of £2.4bn, but operating profit rose by 11% to £251m and cash remitted increased by 11% to £151m. Asia has delivered an operating profit at £632m, +17% yoy, driven by 15% growth in life businesses and 35% growth in Eastspring Investments. At Eastspring, external net inflows of £4.6bn and positive market movements have driven total FuM to a record level of £85.3bn, +28% yoy. The Insurance Groups Directive surplus reached £5.2bn. Solvency II requirement are covered at 2.5x and the internal model was submitted to Prudential's Regulation Authority for approval. The insurer increased its interim dividend by 10% to 12.31p/share.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Prudential. We currently have 40 research reports from 4 professional analysts.
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AFH continues to grow at an impressive rate compared to peers in a tough market environment. It has delivered 8% organic net flows and new business written is up 46% yoy.
Companies: AFH Financial Group
The trade-off in the risk/reward for gold and gold mining equities is improving, as central banks push the current iteration of the post-World War II Bretton Woods financial order towards its limits.
Companies: AVO AJB AGY ARBB BUR CLIG DNL DPP FLTA GTLY GDR MCL MUR NSF PCA PIN SRE PHP RE/ RECI RMDL STX SCE TON SHED VTA W7L
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP SRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF
Cenkos has a record of successful fund-raising for clients and maintaining annual profitability since its inception in 2005. This reflects its focus on client outcomes, a well-established network of business relationships and flexibility in its cost base. Its client relationships should stand it in good stead when market conditions become more favourable. In the meantime, the company’s strong balance sheet, with substantial capital headroom, provides reassurance and Cenkos would not need to attain earlier levels of return on equity to warrant a materially higher valuation.
Companies: Cenkos Securities
The laconic Q3 19 trading update pointed out both Intu’s distressed investment case and the impact of increasing CVAs in the UK. Beyond Intu’s specific case, it was more bad news for the entire British sector.
Companies: Intu Properties
Kingswood presents investors with a rare opportunity to achieve outsized returns from an institutional grade financial services management team positioned to tap into underlying sector tailwinds in retail wealth management. The largest shareholder, KPI Nominees, has injected and underwritten new capital to establish a robust and efficient operation which is now able to benefit from an additional £80m growth capital from Pollen Street (£4.8m drawn), a global investor with a strong track record in financial services. The group aims to offer best in class, vertically-integrated wealth planning and investment management services backed by leading technology, a rigorous risk and compliance environment and innovative product offerings. Below we outline the potential for this model and note the shares could deliver a medium-term 4.8x return, backed by a UK and US-led acquisition strategy. An exciting first step towards rapid growth.
Companies: Kingswood Holdings
1pm's FY19A results were well flagged by June's trading update with revenues of £31.8m (+6% YoY), adj PBT of £8.1m (+4%), while adj EPS grew +2%. Growth this year has come from purely organic means. FY20E will be somewhat of an investment year, building out management and infrastructure to accelerate revenues strongly over FY21-22E. 1pm is focused on sustainable lending over chasing volumes at lower margins.
VietNam Holding (VNH) aims to deliver long-term capital growth, primarily through investing in listed companies in Vietnam. The fund is also permitted to invest in unlisted companies, which in practice are those that have visible near-term plans to list. The fund has undergone significant changes since September 2017, including the appointment of a new board and manager, Dynam Capital Limited. These changes were implemented to address governance issues associated with the previous board and manager, which contributed to VNH’s wider-than-peers discount to NAV. Vietnam’s medium- to long-term economic outlook is one of the brightest in the Asia Pacific region and investors looking for exposure to its rapid growth may find the restructured VNH of interest.
Companies: Vietnam Holding
A growing specialist lender in attractive niches with a 15% NIM and low credit risk, yet trading at book because, for now, it has low leverage and not yet the banking licence it desires, nor further funding facilities. 2019 saw a superior new IT system, internally developed, new product areas and a stronger board.
Companies: Orchard Funding Group
What’s new: Tatton Asset Management’s results for the six months to 30 September revealed strong growth in divisional revenue and profits: ▪ 15% rise in Group Revenue to £9.73m (1H18: £8.45m) - AuM based revenues rose 19% to £7.10m (1H18: £5.99m), with Tatton Investment revenue rising 35% and wrap income declining; - Paradigm revenues rose 7% to £2.60m (1H18: £2.43m); ▪ 23% rise in Group adjusted operating profit to £4.13m (1H18: £3.35m) - 23% rise in AuM based profit to £4.27m (1H18: £3.48m) which is 42% rise in Tatton Investment profits (as previously reported); - 11% rise in Paradigm profits to £0.91m (1H18: £0.82m) and - 11% rise in central costs to £1.1m (1H18: £0.96m) ▪ Adj FD EPS rose 18% to 5.4p (1H18: 4.6p); ▪ Interim DPS was increased 14% to 3.2p (1H18: 2.8p); ▪ Net cash was £9.17m after paying £3.1m final dividend and £2.0m for Sinfonia, with operating cash conversion at over 100%. The Group trading update on 17 October had already announced: ▪ 14.8% rise in Group AuM to £7.0 billion (30/9/18: £5.7 billion: 23% rise YoY; 31/3/19: £6.1 billion: 14.8% rise in the 6 months period): - 1H organic net inflows of £441m increased AuM by 7.2%; - the Sinfonia acquisition added £135m, increasing Group AuM by 2.2%. Outlook: Paul Hogarth, Founder and CEO, notes: “monthly net flows continuing to perform well from both existing and new IFAs despite an uncertain and volatile market” and the reorganisation of the group’s “IFA support services businesses under the existing Paradigm brand but with one simplified operational and management structure …[should enable] improved efficiencies and opportunities”.
Companies: Tatton Asset Management
Gamesys’ pro forma Q319 revenues increased by 20% to £144.3m due to 57% growth in Vera&John (international markets), strong momentum in the acquired Gamesys business and, encouragingly, a return to growth in the Jackpotjoy UK brand. The EBITDA margin declined 680bp to 26.7% as a result of higher taxes and marketing spend. We are raising our FY19 revenues estimate by 2.3% but keeping our EBITDA forecasts unchanged. We continue to forecast net cash flow of £105m in FY20 and our net debt/EBITDA falls from 3.0x currently to 2.0x at end FY20. The stock trades at 6.0x P/E and 7.1x EV/EBITDA, with a 13.8% FCF yield for FY20e.
Companies: Gamesys Group
The recent AGM statement confirmed that trading for the first five months is in line with expectations and there has been no change to guidance issued in June. Christmas savers remains “stable” and the Corporate division has continued the growth shown in FY19.
Companies: Appreciate Group
Kaspi.kz, the largest Paym ents, Marketplace and Fintech Ecosystem in Kazakhstan w ith a leading m arket share in each of its key products and services. GDR offering expected Oct 2019. In the first half of 2019, the Company generated total revenue of KZT226,862m (U.S. $598m), up 34% and net income of KZT77,001m (U.S. $203m), up 54%. Registration document approved for Helios Towers. The Group provides essential network services, flexible infrastructure solutions and reliable power supply to mobile network operators in five African growth economies. Revenue increased 7 per cent. year-on-year to US$191m (H1 2018: US$178m), with Adjusted EBITDA up 15 per cent. year-on-year at US$99m (H1 2018: US$86m) for the six months ended 30 June 2019.
Companies: XSG TRAK CREO BIDS VDTK BKS LSAI WHR CAB GYG
Bonds have traditionally been a core part of private client portfolios. Harry Markowitz is generally credited with developing and popularising the modern approach to investment diversification, as part of his doctoral thesis in 1952. Markowitz’s 60/40 equity/bond portfolio quickly became a staple of retail investor portfolios, and for many years equity and bond portfolios built around this basic concept have been highly successful for investors. The attractions were clear: aside from the solid income that bonds offer investors as a portfolio component portfolio, they also provided something of a hedge to equity exposure.
Companies: UKW TRIG HICL SONG
Regional REIT (RGL) has exchanged contracts for the £27.7m acquisition of a regional office portfolio, its second significant transaction since H119 and marking progress with deployment of £62.5m (gross) proceeds of the July capital raise. With a strong pipeline of investment opportunities, we expect full deployment by early 2020, which will enhance earnings and provide further opportunities for active asset management and value creation.
Companies: Regional Reit