Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Aviva. We currently have 24 research reports from 4 professional analysts.
Aviva is to acquire Irish Life insurer Friends First to consolidate its position as one of Ireland’s largest composite insurers. It’s a good acquisition being acquired from Dutch insurer Achmea (formerly Eureko) at what we view to be a great price at £116m or just 0.8x NAV. The transaction is expected to meet Aviva’s operating return on capital hurdle from year one and to significantly exceed the hurdle thereafter. It will boost Aviva’s share of the life market in Ireland to 15% to match its share of the non-life market. We view Aviva as undervalued and on track to deliver a good increase in 2017 EPS. Buy
Aviva has reported a good set of interim results with headline IFRS Operating profit at £1465m (+11%) which was just ahead of our close to consensus forecast at £1451m. There is an FX benefit of 5% but the underlying performance is still good at 6%. The interim dividend was well ahead at 8.4p/share (+13%) compared to expectations of 8.28p/share whilst the Solvency II capital surplus at 193% (H1 2016: 174%, FY2016: 189%) was in line but also supporting of the current share buy-back programme. The only real area of disappointment was in Canada where the General insurance business was impacted by poor weather but the overall impact on the Group was relatively limited. The share price is up 39% in the last 12 months but we think that there is much further to go. The valuation remains attractive with the shares trading on 2018/19F PE multiples of 9.3x and 8.7x respectively along with an attractive current year dividend yield of 4.8%. Buy.
Aviva has announced the sale of Friends Provident International (FPI) to RL360 Holding Co (a subsidiary of International Financial Group) for £340m in cash plus other minor adjustments. FPI didn’t sit comfortably within Aviva and so it is no surprise that it is being sold. In 2016 it made a £2m pre-tax loss and didn’t remit any cash to Group. We view this disposal positively and have anticipated such a move almost from the moment Aviva acquired Friends Life. Separately we highlight our H1 2017 forecast where we are forecasting Operating profit at £1451m (+10%). Additionally we take this opportunity to roll forward our valuation of Aviva and increase our target price to 635p/share from 592p/share previously.pan
Aviva has announced the sale of its 50% shareholdings in two of its Spanish life and pensions JV’s as well as its retail life business. Total consideration of c£403m represents c1.5x 2016 NAV and 12x 2016 earnings and will result in a gain of c£120m in IFRS NAV and increase its SII surplus by c£130m. The disposal reflects the strategy of allocating capital only to those markets where it can deliver good returns and in our view should be welcomed by shareholders. We believe that the combination of Aviva’s self-help programme, current valuation and attractive dividend yield should see the share price rise in the short to medium term. Buy.
The IFRS Operating profit (ex Ogden) at £3010m (+12%) was 5.2% ahead of consensus at £2,860m and ahead of our £2,905m forecast. The key drivers were Life at £2642m (+8%) and GI/Health at £833m (+9%) with Fund Management at £138m (+30%). The full year dividend was 23.3p/share (+12%) which was in line with expectations whilst the IFRS NAV at 31 December 2016 was 414p/share (2015: 389p) which was ahead of consensus at 409p. The company has announced that it is planning an additional capital return to shareholders in 2017 to reflect the Solvency capital ratio at 189% being ahead of target (150- 180%) range by 9% equivalent to c£1bn. The shares have rallied strongly post Brexit and even a large IFRS Ogden impact of £385m post tax has failed to slow Aviva’s performance. We increase our target price from 525p to 592p/share today to reflect the good performance, capital return and roll forward of our valuation. We maintain our Buy recommendation.
H1 16 operating EPS increased by 1.3% to 22.4p and IFRS operating profit improved to £1,325m (up 13.2% yoy). Life insurance has posted improvements in profits to £1,021m (+20% yoy) but the General insurance & Health showed a downturn trend to £334m (-20.8% yoy). The combined operating ratio increased by 3.1% to 96.2%. Fund Management’s earnings increased by 48% to £49m. IFRS profit after tax stood at £201m (-63.1% yoy). VNB increased 9% (7% at constant FX) to £583m. Progress was recorded in the UK & Ireland (+8% to £280m), Italy (+82% at £71m), Spain (+29% at £16m) and France (+6% to £103m) while a decrease was observed in Asia (-20% to £61m), Poland (-9% to £27m) and Turkey (-6% to £12m). Operating expenses increased by 13% to £1,696m and the integration of Friends Life and Solvency II costs reached £105m (£172m in H1 15), leading to an operating expense ratio of 53.4% (52.8% in H1 15). At the moment, the integration of Friends Life is delivering £201m in run-rate synergies. Management confirmed its £225m synergy target. Cash remittances from business units to the group amounted to £752m vs. £495m in H1 15. The Solvency II capital surplus is £9.5bn and the coverage ratio has remained broadly constant at 174%. The interim dividend per share increased to 7.42p, +10% relative to H1 15.
London equities were begrudgingly impressed with the Bank of England's decision to unleash a package of historic stimulus measures in the wake of the EU referendum. While the MPC voted unanimously in favour of cutting the base rate to an all-time low of 0.25%, the real surprise was the huge expansion of quantitative easing along with a new package of cheap loans for banks which could pump an extra £170bn into the economy despite opposition from a minority of the ninemember committee who considered that the UK macro background does not yet support such drastic action. Despite this Governor Mark Carney then went even further, indicating a willingness to cut rates even further 'close to, but a little above' zero before the year-end together with additional rounds of QE should the economy not respond adequately. Sterling bonds hit record lows, with 10-year Gilts yesterday paying just 0.66%. Equities moved sharply and broadly ahead on the news, with positive sentiment being carried into this morning seen likely to push the FTSE-100 up a further 30 points in early trading. One thing that could potentially spoil the party, however, is the all-important US non-farm employment report for July, with current estimates suggesting an advance of 195k, due this afternoon. Ahead of this release the US markets closed quietly mixed, with tech stocks leading the upside once again while the energy sector rallied with oil remains remaining firmly above the US$40 mark during the session. Asian shares, by comparison, picked up London's positive mood, will all but the Shanghai Composite making reasonable gains. William Hill (WMH.L)and the Royal Bank of Scotland (RBS.L) are amongst corporates due to report today, followed by release of the Halifax house price index mid-morning.
Companies: SAVP AV/ EZJ RSA
Aviva has reported a good set of interim results with headline IFRS Operating profit at £1325m (+13%) which compared to our close to consensus forecast at £1330m. The interim dividend was 7.42p/share (+10%) in-line with expectations of 7.43p/share whilst the Solvency II capital surplus at 174% (180% at YE 2015) was also ahead of expectations at 171%. We view Aviva as a recovery play with potential for material returns of surplus capital to shareholders in the medium term. The valuation remains attractive with the shares trading on 2016/17F PE multiples of 7.8x and 7.2x respectively along with a current year dividend yield of 6.1%. Buy.
Aviva will report its H1 2016 results on Thursday 4 August (same day as RSA). We are forecasting headline IFRS Operating profit at £1330m (+14%), IFRS NTAV (excluding goodwill) at 318p/share and an interim dividend at 7.43p/share (+10%). On the 27 June, post the Brexit vote, Aviva announced that its solvency II coverage ratio remained close to the top of its working range of 150-180%. We believe that it will be 173% at 30 June. The share price has recovered somewhat following the vote to leave the EU but is only trading on 2016/17F PE multiples of 7.8 and 7.2x. In addition we would highlight the 2016/7F dividend yield of 6.1% and 7.0% respectively as further reinforcing our view that the shares are stunningly good value.
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 SL/ ZURN
Aviva will host a CMD today and in advance it has announced a number of objectives. These include mid-single digit IFRS Operating profit in the medium term which represents a slowdown on what we were previously forecasting. In addition it expects to generate £7bn of cumulative remittances over 2016/18 with a dividend payout ratio of 50% of Operating EPS (2015: 42%). There is talk of a share buy-back in the medium term if markets allow. The valuation on most metrics looks cheap but we will need to cut our 2017 IFRS Operating EPS forecast and as such we cut our target price to 525p/share from 660p previously but maintain our Buy recommendation.
AVIVA (AV/ LN), EASYJET (EZJ LN) | FOXTONS GROUP PLC (FOXT LN) | easyJet (EZJ.L, 1,020.0p)
Companies: AV/ EZJ FOXT
In 2015, Aviva’s operating profit increased 20% compared to 2014 to £2,665m, thanks to the contribution from Friends Life (£554m) and underlying growth (£103m). Adverse forex movement cost it £117m. The Life business performed well with operating profits at £2,419m (up 20% yoy) and a VNB at £1,192m (up 24% yoy but only 14% excluding the impact of Friends Life). The General Insurance & Health operating profit recorded a 5% decline relative to FY 14 at £765m. The group’s combined operating ratio improved by 1.1% to 94.6%. Aviva Investors delivered fund management operating profits of £105m, up 33% yoy. AIMS had accumulated £3bn of AuM. Total cash remittances amounted to £1,507m vs. £1,431m in 2014 and excess centre cash flow was £699m, stable relative to 2014. Both the remittance and excess centre cash figures in 2015 exclude £230m of planned dividends that were retained by the Canadian business to fund part of the acquisition of RBC General Insurance and £150m of remittances paid by Friends UK to its parent company prior to acquisition. The integration of Friends Life is on the right track to achieve £225m of synergies in 2016, a year ahead of schedule. In 2015, Aviva has achieved run-rate synergies of £168m and expects £1.2bn of capital benefits, of which £400m was realised in 2015. The insurer expects that the UK Life business will be able to make £1bn of additional remittances over the next three years, enhancing the liquidity profile of the group and facilitating the reallocation of capital towards the high returning or fast growing businesses. The IFRS profit after tax (continuing operations) reached £621m, and the proposed final dividend is £14.05 per share, up 15% relative to 2014. The Solvency ratio II ratio stood at 180%.
Aviva has reported a better than anticipated set of 2015 results. The key points are Solvency II ratio at a very healthy 180% and Friends Life Capital synergies of £1.2bn which translates into £1bn of cash dividended up to Group. The key question now is what will Aviva do with the additional cash – we think it will in part be used to hike future dividends. The IFRS Operating profit at £2665m (+20%) was 7%% ahead of consensus at £2,489m within a tight range and ahead of our £2,510m forecast. The full year dividend was 20.8p/share (+15%) just 2% behind expectations. The IFRS NAV at 31 December 2015 at 389p/share (2014: 340p) which was bang in line with expectations at 389p/share or 315p/share (2014: 274p) excluding goodwill. Following the great figures and the capital synergy benefits from Friends Life, the question now is what is CEO Mark Wilson going to do with the cash? We maintain our Buy recommendation and 660p/share target price.
Headline numbers will be flattered by the inclusion of Friends Life, although we expect significant progress on integration cost-savings. The benefits of what is primarily a cash driven acquisition should be evident in a re-based dividend with expectations of further re-basing in 2016-7.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Aviva. We currently have 24 research reports from 4 professional analysts.
|20Nov17 16:39||RNS||Holding(s) in Company|
|17Nov17 07:00||RNS||Holding(s) in Company|
|14Nov17 11:00||RNS||Director/PDMR Shareholding|
|14Nov17 07:00||RNS||Aviva To Acquire Irish Insurer Friends First|
|13Nov17 16:35||RNS||Holding(s) in Company|
|07Nov17 16:14||RNS||Holding(s) in Company|
|03Nov17 09:05||RNS||Holding(s) in Company|
Frenkel Topping* (FEN): Doubling profits in a hiatus (CORP) | SRT Marine Systems* (SRT): Projecting a strong H2 (CORP)
Companies: Frenkel Topping Group SRT Marine Systems
In the November edition of the Hardman Monthly Newsletter, Nigel Hawkins assesses the achievements of AIM – and how it has thrived, despite a challenging financial environment, in recent years.
Companies: SPH AVO SCLP VAL AGY CLIG TRX AVCT APH CMH MCL MUR
Keystone Law Group— full service law firm with over 250 self-employed lawyers . Due late Nov. Offer TBA | Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level | City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer TBA | Boku - Independent direct carrier billing company. Revenues were up 21% to US$10.2 in HYJun17. Q32017, revenues grew to $6.5m, up by 44%. The Company also saw continued growth across all of its key metrics: user numbers, total payment and a positive adjusted EBITDA for the month of September 2017. Due 20 Nov. Offer raising £45m at 59p with mkt cap of £125.9m | Ten Lifestyle Hldgs. Technology-enabled lifestyle and travel platform providing trusted concierge services to the world's wealthy. Net revenue increased from £20m in the year ended 31 August 2015 to £33m in the year ended 31 August 2017, a compound annual growth rate of 29%. Offer TBA, expected 27 Nov 2017 | OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m | OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected mid November |
Companies: FRR AST ABDP BZT AVCT MTFB WEY FFI SAV
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%.
Clipper Logistics (CLG LN) In line H1 update; Introducing FY’20 forecasts | Fenner (FENR LN) Upgrades, with more to come | Genus (GNS LN) Trading in line with expectations | Harwood Wealth (HW LN) Ahead of expectations, upgrading forecasts | Xaar (XAR LN) Further operational developments
Companies: FENR GNS XAR CLG HW/
Clean Invest Africa—Introduction due around 14 Nov. Vehicle established to identify investment opportunities and acquisitions in renewable and clean energy projects/companies or alternative technologies that are used in a socially and environmentally responsible way that will aid the development of the African continent. Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level. City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer TBA. Boku - Independent direct carrier billing company. Revenues were up 21% to US$10.2 in HYJun17. Q32017, revenues grew to $6.5m, up by 44%. The Company also saw continued growth across all of its key metrics: user numbers, total payment and a positive adjusted EBITDA for the month of September 2017. Due 20 Nov. Offer TBA. Ten Lifestyle Hldgs. Technology-enabled lifestyle and travel platform providing trusted concierge services to the world's wealthy. Net revenue increased from £20m in the year ended 31 August 2015 to £33m in the year ended 31 August 2017, a compound annual growth rate of 29%. Offer TBA, expected 27 Nov 2017. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected mid November.
Companies: TRIN IBPO BGO AFHP AMYT STM RLD C4XD NKTN ENET
Ahead of today’s investor conference Pru has announced yet another strong performance for Q3 with new business sales at £5174m APE (+16% or +8% at CRE) and more importantly new business profitability at £2469m (+26% or +17% at CRE). The Q3 new business margin has improved to 47.7% (Q3 2016: 43.9%) with improvements in the UK, US and Asia. The growth and new business profit in Q3 reinforce our SOTP valuation model that generates our 2210p target price. We believe that today will be about emphasising the huge opportunities that exist in each of these areas. In Asia the health, protection and savings of the rapidly growing middle class, in the US the retirement income needs of the baby-boomers and in the UK the opportunity created by the converging life and savings markets. Buy.
Alpha Financial Markets Consulting— Global provider of specialist consultancy services to the asset and wealth management industry. Due Oct. Revenue of £6.7 million for the year ended 31 March 2011 to £43.6 million for the year ended 31 March 2017. Offer TBA. Due 11 Oct. Cora Gold— West African focused gold exploration business, significantly enlarged by the amalgamation of the gold exploration assets in Mali and Senegal of Hummingbird Resources and Cora Gold's former parent, Kola Gold. Due 9 Oct. Offer TBA Springfield Properties—Scottish housebuilder. “Our turnover exceeded £100 million for the first time this year and now we employ around 500 people. This IPO is the next step in our growth.” Expected Mid October. Offer TBA. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. SolGold—Publication of prospectus regarding transfer from AIM. Due 6 Oct Glenveagh Properties— Dual Dublin and London IPO. Irish homebuilder with a principal focus on the Greater Dublin Area. The Group will combine an attractive land bank with a Gross Development Value of c.€1.1 billion. Seeking to raise gross proceeds of up to €550 million. Due 10 Oct People’s Investment Trust—Objective of sustainable wealth creation. Also to list on the Social Stock Exchange. Targeting £125m raise on 17 Oct. No performance fees or executive bonuses in order to focus on long term rather than short term performance. ContourGlobal LP—Report on Bloomberg that the thermal energy power generator is considering a London listing.
Companies: SBTX SRON NSCI MTFB NBB MERC AGL
Belluscura— Provider of premium medical devices at value prices to address part of the global unmet need for affordable, premium quality medical devices. Raising £7.5m to £10m. Offer TBA. Due early Dec Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising . 2016 rev £0.7m and £7.3m operating loss. Offer TBA Keystone Law Group— full service law firm with over 250 self-employed lawyers . Due 27 Nov. Raising £10m at 160p. Mkt Cap £50m. Revenue of £25.6 million and EBITDA of £2.1 million. In FYJan17. Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level. City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer TBA.
Companies: FRR BOD SKIN ARTL AGTA BMN MERC ANGS WAND WAND SIM
Third quarter results remained depressed by an elevated cost of risk while the top line proved pretty resilient. The capital position improved further but the low non-performing assets coverage remains a major question mark that will determine the pace of the group’s future profitability recovery.
Companies: Banco Comercial Portugues
Harwood Wealth has issued a strong full year trading statement. Revenue and adjusted EBITDA for the full year are now expected to be ahead of market expectations. Performance has been positive during H2 with the combination of organic and acquisitive growth continuing. We upgrade our FY17e EBITDA forecast by 11% to £4.0m. With a pipeline of acquisitions, organic growth potential and a well capitalised balance sheet, we see intrinsic value at >230p in time.
Companies: Harwood Wealth Management
Finsbury Growth & Income Trust (FGT) aims to generate long-term capital and income growth from a concentrated portfolio of primarily UK equities. Manager Nick Train has recently initiated a position in Manchester United, which is FGT’s first new holding since 2015. He believes that the football club has a very strong and valuable franchise, along with a history of generating positive returns for shareholders. FGT has a long-term track record of outperformance versus its FTSE All-Share index benchmark, with higher returns over the last one, three, five and 10 years. The trust has a progressive dividend policy; the FY17 dividend was 8.4% higher than in FY16, despite a meaningful dividend cut at portfolio company Pearson.
Companies: Finsbury Growth & Income Trust
Since our first quarterly at the end of 2015, 12 of the 59 companies we included in our valuation tables have been bid for. Given those tables were simply designed to show the range of companies present within the sector, not a hit-list of undervalued opportunities, the fact that 20% of them have been taken over is worth looking at in more detail. At a time when warnings and share price collapses from the likes of Interserve, Carillion, MITIE, DX and Capita and Serco have dominated newsflow, it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations then the evidence is that there is an army of potential bidders (reinforced by the weakness of sterling) ready to take advantage.
Companies: FOUR ACL BOOT CLL CMS CNCT FCRM LOK PPH RNWH SVCA STAF UTW WATR VANL WYG
Further evidence that the shrewder investor prefers a smaller company, the Nobel Prize in Economics was awarded to Professor Thaler, an avowed fan of the smaller brethren. Back down to earth, all markets continue to make headway, with the smaller company indices continuing to lead the way. Despite the apparent deadlock in the Brexit process, life appears to carry on. The MPC meeting on 2 November and the Budget on 22 November may offer greater insight. In Share News & Views, we comment on recent updates from Cropper*, Halstead, Norcros, Tricorn* Walker Greenbank and Wincanton.
Companies: APC BMS CRPR ECSC EUSP FDM GETB PCF PPIX SNX SPRP SQS TCN W7L