Adamjee Insurance (AICL): 2Q2018 EPS of Rs1.1, up 3% YoY; DPS Rs 1/share (Below expectations)
- AICL declared earnings of Rs1.1/share in 2Q2018, up only 3% YoY, mainly on back of higher taxation. Effective tax rate during 2Q2018 clocked in at 48% as compared to 33% in 2Q2017. This is primarily due to super tax paid by the company during the period. Lower tax rate during 2Q2017 was also due to tax benefits taken by the company, we believe.
- Net Premium of the company improved by 2% YoY to Rs6.5bn, which remained lower than expectations.
- However, net claims of the company dropped 5% YoY to Rs3.4bn which supported underwriting business of the company during the quarter.
- Due to lower claims & marginal growth in expenses, underwriting income of the company improved to Rs191mn during the period under review.
- Investment income of the company was up 17% YoY to Rs538mn in 2Q2018, supporting earnings of the company.
- In 1H2018, earnings of AICL clocked in at Rs3/share, flat on YoY basis. Underwriting income improved by 55% during 1H2018, however, lower investment income kept bottom-line growth in check. Investment income was down 4% YoY due to lower income from equity investments.
- Key risks for the stock includes 1) slowdown in insurance business, 2) fall in equity markets and 3) deterioration of Pakistan macros.
Co. is primarily engaged in underwriting fire, marine and motor insurance. Co. is also engaged in other classes of insurance including engineering, bonding and surety, banker's insurance, burglary and theft, kidnap & ransom and medical insurance.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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