CIG Pannonia - Resilient Operation Enables Pannonia To Withstand Economic Hardship Ahead
- We reiterate CIG Pannonia (Pannonia) as BUY while lowering our 12-m target price to HUF 410 (from HUF 429 previously).
- We have revised down our 2022E/2023E net income forecasts by 20% and 14% to HUF 1.6 bln in 2022 and HUF 2.04 bln in 2023 (previously HUF 2.03 bln and 2.37 bln) after having incorporated the potentially harmful impact of 1) a substantial increase (<+40%) in insurance (“windfall”) tax imposed on Hungarian insurers for the period between 1 July 2022 and 31 December, 2023, and 2) a potential recession, which we see approaching as an consequence of the severe energy crisis in Europe.
- Consequently, EPS may decline by 5% to HUF 17 in 2022 and then to grow again by 27% to HUF 22 in 2023 (vs. our previous estimates of HUF 21 for 2022 and HUF 26 for 2023). Dividend will also inevitably drop, albeit from an unsustainably high level, to ca. HUF 11 a share for 2022, implying a DIVY of 3.8% on our estimate.
CIG Pannonia Eletbiztosito Nyrt. CIG Pannonia Eletbiztosito Nyrt (Cig Pannonia Life Insurance Plc) is a Hungarian-based company active in the insurance sector. The Company offers insurances for pensioners, including funeral and inheritance policy, entrepreneurs, families and recent graduates. The Company's portfolio comprises Unit-linked Life Insurance, Endowment Life Insurance, Term Life Insurance, Alkony Life Insurance and Retirement Life Insurance as well as Accidental Benefit Rider and Premium Assistance Rider. As of December 31, 2011, the Company operated four wholly owned subsidiaries, including CIG Pannonia EMABIT Ltd, Pannonia Biztositaskozvetito LLC and Pannonia PI-ETA LLC, all based in Hungary, as well as TISIA Expert Srl, based in Romania.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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