Great Eastern Holdings - 3Q15 results: Strong Singapore sales

Great Eastern reported a weak headline 3Q15 operating profit of S$68 mn, down 62% YoY, with NPAT down 64% YoY to S$70 mn due to weaker markets (STI down 15.9% in 3Q15). As such, we downgrade our 2015E earnings by 12% with outer years up 3-4% driven by stronger business momentum.

New business premiums (APE) were S$266 mn in 3Q15, up 33% YoY, driven by strong sales following the S50 campaign in Singapore (+49%) and steady growth in Malaysia (+5%).

Value of new business (VNB) was up 16% YoY, with VNB margin decreasing to 38%% from 44% in 3Q14, driven by higher single premium sales in Singapore (+64% vs regular premium +37%). Great Eastern is hoping to convert the single premium business customers sold to in 3Q to regular premium in 4Q and beyond.

We maintain our OUTPERFORM investment rating with an unchanged target price of S$31.00, implying 10x VNB multiple. Current 2016E multiples are 10x P/E, 1.4x PBV (ROE 15%) and 1.0x EV, which we deem a very attractive entry level.

Great Eastern reported a weak headline 3Q15 operating profit of S$68 mn, down 62% YoY, with NPAT down 64% YoY to S$70 mn; due to weaker markets (STI down 15.9% in 3Q15).

Strong sales growth. New business premiums (APE) were S$266 mn in 3Q15, up 33% YoY, driven by strong sales following the S50 campaign in Singapore (+49%) and steady growth in Malaysia (+5%).

Technical Analysis
Daily Chart
GE-ValueOfBusinessValue of new business (VNB) was up 16% YoY, with VNB margin decreasing to 38%% from 44% in 3Q14, driven by higher single premium sales in Singapore (+64% vs regular premium +37%). (Read Report)

Source : Credit Suisse Asia Pacific Equity Research

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