Aksigorta A.S. (AKGRT TI) - Underwriting profitability improves: Upgrading to Buy
Aksigorta announced 1Q19 net earnings of TRY78m (+25% q-q, +53% y-y), above both the RT consensus (TRY72m) and our estimate (TRY69m). High investment gains and improved technical profitability drove the strong results in 1Q. Net investment income margin surged to 11% from 5% a year ago on high TRY deposit rates. Although y-y earnings contribution of underwriting results declined significantly, in q-q terms we see improvement on declined loss ratio in motor-own-damage (MOD). Aksigorta delivered a technical profit of TRY4m in 1Q, while its combined ratio dropped to 99% (18YE: 108%, 1Q18: 93%). Trailing ROE rose to an eye-catching 39% from 27% a year ago.
We raise our FY2019-21 EPS by 5%/20%/14%. We lift our TP by 25% to TRY5.11/sh and upgrade the stock to BUY from Hold.
Aksigorta is an international insurance group. Co.'s main operations include insurance activities based on non-life insurance branches, including primarily fire, marine, personal accident, engineering, agriculture and health. Co. focuses its business activities in Europe and Asia, which are grouped around four segments: Belgium, U.K., Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships with financial institutions and key distributors around the world. Co. operates in Turkey.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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