Liberty Holdings | No respite | FY'18 results preview
Liberty Holding's (LBH) will release FY'18 results on Thursday 28 Feb '19. We expect FY'18 Normalised Operating Earnings to have risen 42% y/y to R2020m after a decline of 37% and 19% y/y for FY'16 and '17 (FY'15: R2.7bn). The FY'17 base period included:• R158m in once-off costs relating to STANLIB's outsourcing,
• A R56m loss from the Nigerian operation terminated in H1'18 and
• c.R198m in modelling changes to the life company back-book.
Despite a recovery in operating profit we expect no earnings from the shareholders fund in H2'18 to depress the Normalise HEPS growth to -11% y/y (872cps).
LBH remains adequately capitalised allowing for dividend growth (c.2% y/y). Standard Bank's (SBK) commitment to a universal financial service offering keeps LBH relevant and improves our long-term growth assumptions. We are increasingly concerned that integration risk between SBK and LBH delays growth for LBH. However, we believe risks to the LBH investment case are overplayed and the current entry point provides a sufficient margin of safety.
Liberty Holdings is a holding company. Co. provides a range of products and services to help customers build and protect long-term wealth. These include life and healthrelated insurance, investment management and retirement income facilitation. Co. provides risk cover through insurance contracts to individuals and institutions that provides financial assistance to the customer in the event of death, sickness or disability and retrenchment; managing customer wealth through investment advice, active and passive asset management services; providing retirement financial assistance to pensioners; and administration and consulting services to health risk insurers.
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