WOOD Flash – PZU: strong profits and attractive shareholder returns implied by 2025-27E strategy update
PZU has published its 2025-27E strategic outlook. The key takeaway for shareholders, in our view, is the target of at least PLN 6.2bn of net profit in 2027E, with a minimum 2027E DPS of PLN 4.5. In the strategic presentation, significant focus has been put on revenue growth engines, and each of the key revenue pillars is explained separately. Also important for the market is that the insurer may sell its c.32% stake in Alior Bank to its other subsidiary, Bank Pekao, in 1H25E. The banks are to investigate the most attractive long-term design of their operations by end-2025E, according to PZU’s strategic presentation. We believe that that the strategic update deserves a positive market reaction, as the current market valuation is not reflective of the earnings ambitions of PZU’s management. We see the change in the structure of PZU’s banking holdings as fairly neutral for PZU’s group consolidated EPS, if both banks remain in the group at the same scale.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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