WOOD Flash – PZU: announces ambitious 2024E strategic targets
PZU announced its updated strategy yesterday evening (25 March), setting the key KPI targets for 2024E. PZU aims to achieve PLN 3.4bn of consolidated net profit, with an underlying ROE of c.17.4%. We see the strategy as ambitious but, at the same time, we note that the focus of profit growth is on the banking operations. Net profit, adjusted for the banking operations, is targeted at c.PLN 2.6bn, down from the PLN 3.3bn achieved in 2020. At the same time, based on our simplified calculations with regards to implied average capital levels in 2024E, we note that the underlying strategic model of PZU Group assumes very low capital generation. This suggests, to us, that PZU is still aiming to remain a hefty dividend payer, as over the next four-year horizon, average capital is set to grow by PLN 0.8bn. We remain BUYers of PZU, due to the hefty dividend potential in the medium term, implied by the key strategic targets on our base analysis, and its still-highest ROE among the largest financial sector companies listed within our coverage space.Powszechny Zaklad Ubezpieczen is an insurance group based in Poland. Co. is engaged in offering a broad range of insurance and financial products. Co. pursues three main lines of business: Property and Casualty Insurance, offered by PZU; Life Insurance, offered by PZU Zycie; and Open-end Pension Funds, offered by PTE PZU, the manager of OFE PZU Zlota Jesien. Co. maintains a network of sales and service outlets including 500 outlets throughout Poland, including 243 shared outlets (common for PZU and PZU Zycie), 137 outlets of PZU Zycie and 120 outlets of PZU. Co.'s business is focused on the Polish market but it also conducts insurance business in the Lithuanian and Ukrainian markets.
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