Liberty Holdings | The rebound year
LBH's FY'17 results fell short of expectations. Normalised HEPS increased 9% YoY compared to our forecast of 16%. Poor claims experience in Liberty corporate and operational losses from STANLIB Tanzania were reconciling items. A series of once-off losses in FY'16 and FY'17, coupled with weak consumer confidence and low average market returns have created a low basewhereby we expect 36% YoY growth in normalised HEPS in FY'18f. Standard Bank (SBK) continue to drive a digital distribution strategy with mobile app users up 37% YoY to 982K. We expect SBK to leverage their new core banking system to sell LBH products. Given the prospects of this strategy for LBH, we continue to believe the counter is undervalued on a sustainable earnings basis.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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