Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Prudential. We currently have 41 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 41 research reports from 4 professional analysts.
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Belvoir’s FY 2019 results were strong, with adj. EPS up 13% (13.6p vs our forecast 13.0p) and strong cash generation. COVID-19 will affect property sales in FY 2020 but lettings (61% of 2019 gross profit) will be more resilient, helped by the Government’s measures to support employment and incomes. Management has reacted quickly, reducing costs and putting plans in place to support franchisees. We now forecast a ‘lost year’ in FY 2020, assuming five months of no sales activity, a significant reduction in financial services and a reduction in lettings fees, partly offset by a £1.5m cost reduction. The capital light franchise model, inherent high levels of cash generation and no final dividend for 2019 mean we forecast gross cash of £2.0m at December 2020, down from £3.6m. Belvoir is in good financial shape to weather the storm and support its franchisees before returning to normal activity. The success of the strategy was again evidenced by a strong start to 2020 prior to COVID-19.
Companies: Belvoir Lettings
Alpha has released an update today, which highlights the impacts of the recent global lockdown and extreme FX volatility on the trading and working capital of their clients. We have reduced this year’s revenue forecast by 14% and EPS by 24%. We show the Company has sufficient capital to hit these revised forecasts and importantly has a business model, capital structure, technology platform and client proposition to continue to take share and return to high-growth when economies normalise.
Companies: Alpha Fx Group
The scaling of Duke's royalty portfolio was progressing as expected up to March 2020, with record cash receipts that month. Due to Covid-19 and the UK's economic shutdown, macro conditions have worsened and become highly uncertain. This is likely to see some royalty partners' future cash royalties decline, which in turn, will negatively impact FV's in the FY20E results. Duke's high margin and cash generative nature ensures it is well placed to trade through these challenges. Given the degree of uncertainty in outlook, we remove forecasts and put our recommendation Under Review and await further clarity on the portfolio.
Companies: Duke Royalty
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
Appreciate saw trading in line with expectations until the end of February, but the closure of fulfilment locations in response to COVID-19 has seen a substantial drop in billings in the past week. Management is withdrawing its guidance, but will provide an update in the second half of April. Meanwhile, the interim dividend (£2m) will not be paid and the FY dividend will be reviewed in June (c. £4m). We see the net cash balance sheet as strong enough to weather the storm. The company’s digital first strategy will accelerate and help to mitigate the pressure on physical vouchers. We will review our estimates in April, but we think that a CY20E EV/EBIT of 3.8x on existing numbers more than reflects the downside risks.
Companies: Appreciate Group
We believe that NSF’s response to the current pandemic is in the interests of all its stakeholders. The operational shift towards remote working helps protect its staff whilst enabling its clients to continue to access the services they need. Similarly, its decision to reduce lending and focus on its existing clients and those most in need, is the prudent thing to do. These actions, combined with the high risk-adjusted margins on its existing loan book should enable the group to generate positive cash flow, even allowing for an increase in impairment during the current period of economic uncertainty. This should leave the group in a stronger position to serve its clients and win share when the current government restrictions are lifted. As a result, of this medium-term outlook we reiterate our BUY rating.
Companies: Non-Standard Finance
Covid-19's future impact is likely to overshadow FY19A results which delivered YoY growth, despite imposition of the tenant fee ban and the backdrop of a subdued lettings/sales market. With franchisee premises and the UK housing market now closed, FY20E trading will be materially affected and growth strategies (financial services, assisted acquisitions) are now on hold. The group will fall back on its recurring lettings revenue, streamlined cost base and debt-free balance sheet to seek profitable trading and positioning for a market rebound in FY21E. Given uncertainty as to Covid-19's duration and severity, we put our recommendation Under Review and withdraw forecasts awaiting further clarity.
Companies: Property Franchise Group
Companies: AVO AGY ARBB ARIX BUR CMH CLIG DNL GDR HAYD PCA PIN PHP RE/ RECI RMDL STX SHED VTA
FY Results – Significant strategic progress and well positioned for 2020 Digitalbox is an AIM-quoted digital publishing company, currently owning two distinct digital media assets and with a scalable platform to grow through acquisitions. This morning's FY2019 results evidence the substantial progress the company made in 2019 at both a financial and operating level and with a very robust balance sheet to capitalise on future M&A opportunities. The company reported revenue of £2.24m and a reported adjusted EBITDA of £0.53m, which after adjusting for prepaid costs from 2018 with respect to Facebook marketing cost, yields an EBITDA of £0.63m. Whilst key operating KPI's for 2019 were very strong y-o-y, and Q1:2020 is said to have traded ‘ahead of management expectations', increased traffic to their assets will likely be offset by increased pressure in advertising spend in 2020. As such, we prudently reduce our FY2020E and FY2021E adjusted PBT estimates by 35% and 22% to £0.59m and £0.74m respectively. Revenue and profitability is H2 weighted, and thus it is possible that the company might experience positive momentum in advertising spend, but it's too early to call. Assuming a 10x FY2020E EV/EBITDA multiple, we see fair value at 9.3p.
U+I has confirmed the disposal of its share in the Harwell Campus, delivering development and trading gains of c.£11m. Crucially, these should fall in to FY20, subject to discussions with auditors. The >£40m cash realised from the sale compares to a £10m investment six years ago. An adjoining building on the Harwell Campus has also been sold ahead of book value, for £7.5m. We prudently leave any forecasts unchanged at this uncertain time. A post-close trading update with more detail will be given on 15 April. The shares now trade at a 72% discount to NAV, vs the UK sector at a 15% discount.
Companies: U&I Group
Numis expects to report H120 revenues c 10% higher than in H119 with revenue from investment banking slightly down and equities ahead on the back of increased market volatility. Given the impact of the pandemic we have provided indicative scenarios rather than a point estimate for FY20. Numis is strongly capitalised and has net cash of over £84m. Looking beyond the current dislocation, it is well positioned to serve its corporate client base in a period in which the need for fresh equity and a revival in corporate transactions could drive a sharp recovery in activity.
Companies: Numis Corporation
Gross profits up 50%: As with all litigation funders, we focus on the gross profits as this reflects the net gain on investments. Pleasingly, GP was 50% ahead of the comparable period following settlements of cases and, mainly, developments in ongoing matters (fair value uplifts). Whilst realised GP fell from c.£2.2m to c.£1.0m, Management expects increased cash realisations in H2 given the 32 live cases that are in advanced settlement stages. Indeed, Manolete has received an additional £0.8m of settlements since the period close. As at 7 November 2019, ROIC remains at a market leading 159% (last reported 180%), which could be skewed upwards in H2 should these advanced cases settle favourably.
Companies: Manolete Partners
Aviva announced an operating profit of £3,184m (up 6% yoy) and an IFRS profit after tax at £2,663m, better than expected. The main source of operating earnings improvement was the reduction in net expenses in the UK digital business by £165m regarding 2018. The cash remittance reached £2,597m, and the insurer is on the right track to deliver one of the key 2022 targets: remitting £8.5-9bn over 2019-22. We keep our positive opinion on the stock.
Companies: Aviva Plc
Favourable trading conditions have led to Plus500 issuing its second trading update in less than a month. Not only has the recent surge in volatility resulted in a significant increase in client activity, the strength of the group’s platform and brand has helped it deliver stronger user growth during Q1’20. The combination of the strong financial and operational performance sees us upgrade our FY20 PBT estimate by 52%. Despite the clear opportunity for the company to continue to win market share and deliver profitable growth, the shares trade on just 6.6x CY21 earnings. As a result, we reiterate our BUY rating and increase our TP to 1450p (from 1000p).