Liberty Holdings | Wounded not defeated
Liberty Holding's H1'18 results show stability with Normalised Operating Earnings rising 18% y/y to R958m after a decline of 37% and 19% y/y for FY'16 and '17 (FY'15: R2.7bn). We believe the potential for Standard Bank to integrate Liberty creates a compelling investment case for Liberty minorities. However, due to limited strategic traction in H2'17 and H1'18, we increase our assessment of execution risk by adding 70bps to our previous risk discount rate of 14.2%.In our view, Liberty's earnings profile is geared to the SA economy and more cyclical than its SA peers, leading to a discounted rating. Liberty remains adequately capitalised allowing for dividend growth, while Standard Bank's commitment to a universal financial service offering improves the long-term growth rate for Liberty.
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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