AvivaSA Emeklilik (AVISA TI) - Profitable growth should continue: Maintain Buy
We expect AvivaSa’s net earnings to grow by 36% in 2020, followed by a 13.3% growth in 2021. AvivaSa’s 2020-21E RoE should average at an eye-catching 45%, the highest among our financial sector coverage. We also envisage both life and pension businesses to support earnings over the next two years led by growing pensions and life premiums coupled with contained opex. We think a strong quarter is ahead for AvivaSa after weak 4Q results on seasonally high operating expenses and despite a 15-day bancassurance ban in February. AvivaSa expects above 40% life premium growth and 25-35% EPS growth on IFRS basis for 2020, in line with our expectations.
We raise our FY20-21E EPS by c18%/c21% on improving premium retention and potential cost declines. We raise our TP to TRY19.93 on a higher long-term RoE assumption of 38% and a lower risk-free rate assumption of 13% (previously 17%). Reiterate BUY.
AvivaSA Emeklilik ve Hayat AS is a Turkey-based private pension and life insurance company. The Company's pension plans are: Biriktiren VIP Plan, Prestijli Emeklilige Yatirim Plan, Biriktiren Gelecek Plan, Plan Nar plan, Zumrut Plan, Emeklilige Yatirim Plan and Mutlu Birikimler Plan. Its life insurance products are: Refund of Premium Life Insurance, Long-Team Life Insurance, Continuing Education Insurance, The Future is in your Hands, Your Custom-Made Life Insurance, My Life Support Insurance, Plan B Protection Insurance, Life Support Insurance, VIP Life Insurance, Cheque Life Insurance and SME Credit Life Insurance. In addition the Company offers personal accident and unemployment insurances as well as corporate solutions.
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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