A Brief Look at LPI Capital Bhd.

2006 EPS 33.8 DPS 32.4

2007 EPS 38.0 DPS 48.2

2008 EPS 45.1 DPS 48.8

2009 EPS 54.5 DPS 40.5

2010 EPS 63.83 DPS 55.0

Price RM 13.96 (13.01.2011)

Estimated EPS for 2011 63.83*1.10 = 70.213

Projected PE for 2011 = 19.9 x

Historical

5 Yr

PE 11.6 - 17.5

DY% 7.8 - 5.1

10 Yr

PE 11.2 - 16.4

DY% 6.9 - 4.7

Capital Changes

2010 1/2 Bonus, 1/10 Rights @ RM 7.00

LPI

Date announced 11th Jan 2011
Quarter 31/12/2010 Qtr 4 FYE 31/12/2010

STOCK LPI C0DE  8621 

Price $ 14.18
Curr. ttm-PE  22.50
Curr. DY 3.61%

LFY Div 51.25 DPO ratio 81%
ROE 12.0% PBT Margin 25.8% PAT Margin 19.9%

Rec. qRev 190745 q-q % chg -12% y-y% chq 24%
Rec qPbt 49135 q-q % chg 4% y-y% chq 6%
Rec. qEps 16.77 q-q % chg 0% y-y% chq 6%
ttm-Eps 63.03 q-q % chg 1% y-y% chq 10%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 10%
Avg.H PE 15.00
Avg. L PE 12.00

Forecast High Pr 15.23 Forecast Low Pr 8.95 Recent Severe Low Pr 8.95

Current price is at Upper 1/3 of valuation zone.
RISK: Upside 17% Downside 83%
One Year Appreciation Potential 1% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 7%

CPE/SPE 1.67
P/NTA 2.69
NTA 5.27
SPE 13.50
Rational Pr 8.51



Decision: 
Already Owned: Buy, Hold, Sell, Filed;
Review (future acq): Filed
Discard: Filed

Guide:
Valuation zones Lower 1/3 Buy, Mid. 1/3 Maybe, Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr


2009 Sales 431,018,000
Employees: 543
Market Cap: 3,120,668,400
Shares Outstanding: 221,324,000
Closely Held Shares: 107,659,500

LPI Capital posts RM36.9m net profit, declares 45c dividend

LPI Capital posts RM36.9m net profit, declares 45c dividend
Written by Joseph Chin of theedgemalaysia.com
Tuesday, 11 January 2011 18:33


KUALA LUMPUR: LPI CAPITAL BHD [] posted net profit of RM36.94 million in the fourth quarter ended Dec 31, 2010, up 5.6% from the RM34.97 million a year ago, boosted by higher gross premium underwritten.

It said on Tuesday, Jan 11 revenue rose 6.6% to RM190.74 million from RM178.88 million while net assets per share were RM5.26 versus RM6.54.

It also declared a second single tier interim dividend of 45 sen per share which will go ex on Jan 24 and entitlement date is Jan 26.

For the current quarter and financial year ended Dec 31, 2010, the revenue increased by 6.6% to RM190.7 million and by 7.7% to RM752.1 million respectively.

"The significant increase was mainly due to higher gross premium underwritten," it said.

LPI said group pre-tax profit increased by 5.6% to RM49.1 million for the current quarter and by 12.4% to RM181.3 million for FY ended Dec 31, 2010.

It said the increase in the current period was mainly due to higher investment income while the increase in the financial year was mainly attributed by higher underwriting profit.

http://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=180020&Itemid=2

One Year Performance of Selected Stocks in KLSE (1)

LPI

STOCK LPI
C0DE  8621 

Price $ 11.5
Curr. PE (ttm-Eps) 18.51
Curr. DY 3.67%

Rec. qRev 216952 q-q % chg 15% y-y% chq 5%
Rec. qPbt 47445 q-q % chg 32% y-y% chq 11%
Rec. qEps 16.85 q-q % chg 40% y-y% chq 13%
ttm-Eps 62.13 q-q % chg 3% y-y% chq 11%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 4%
Avg.H PE 17.00
Avg. L PE 13.00

Current price is at Middle 1/3 of valuation zone.

RISK: Upside 37% Downside 63%
One Year Appreciation Potential 2%  Avg. yield 5%
Avg. Total Annual Potential Return over next 5 years 7%

CPE/SPE 1.23
P/NTA 2.31
SPE 15
Rational Pr 9.32


(CPE = Current PE, SPE = Signature PE)

LPI earnings up on unit’s higher underwriting profit

Friday October 8, 2010
LPI earnings up on unit’s higher underwriting profit

PETALING JAYA: LPI Capital Bhd’s net profit for the third quarter ended Sept 30 rose to RM36.21mil from RM32.90mil in the same period last year.

This was achieved on higher underwriting profit generated by its wholly-owned subsidiary Lonpac Insurance Bhd.

Revenue for the period increased to RM216.95mil from RM206.63mil recorded in the same period last year mainly due to higher gross premium underwritten, the company told Bursa Malaysia yesterday.

Earnings per share rose to RM16.85 from RM15.33.

For the nine months ended Sept 30, LPI’s net profit was up to RM100.97mil from RM91.12mil previously while revenue rose to RM640.46mil from RM583.88mil.

Earnings per share increased to RM47.03 from RM42.46.

Barring any unforeseen circumstances, LPI said prospects for the group should be satisfactory for the year 2010.

In a separate statement, LPI chairman Tan Sri Teh Hong Piow said Lonpac was able to achieve a significant improvement in its underwriting surplus despite operating in a competitive market.

Its underwriting surplus rose by 38% to record an underwriting profit of RM77.9mil for the nine-month period versus RM56.5mil previously on the back of gross premium income of RM586.3mil.

“Lonpac places utmost priority on strong risk management of its assets and liabilities as well as stringent internal controls in managing its operations,” he said.

LPI shares closed up six sen to RM11.76 yesterday with 17,900 shares traded.

http://biz.thestar.com.my/news/story.asp?file=/2010/10/8/business/7184502&sec=business

Comment:  This remarkable company has seen at least 15% annual growth in its revenues, profit before tax and EPS for many years.  This speaks for its durable competitive advantage in its insurance business.

LPI top gainer on earnings growth, bonus issue plan

LPI posted net profit of RM26.44 million in the second quarter ended June 30 versus RM22.74 million a year ago. It also declared an interim dividend of 10 sen per share.

The company proposed a bonus issue of up to 69.36 million new shares on a one for two basis and also a proposed renounceable rights issue of up to 13.87 million new rights shares at an issue price of RM7 per rights share.

The rights shares will be on the basis of one rights share for every 10 existing LPI shares held.


http://www.theedgemalaysia.com/business-news/169553-lpi-top-gainer-on-earnings-growth-bonus-issue-plan.html

LPI Capital Records RM84.72 Million In Pre-Tax Profit

July 08, 2010 20:59 PM

LPI Capital Records RM84.72 Million In Pre-Tax Profit

KUALA LUMPUR, July 8 (Bernama) -- General insurer, LPI Capital Bhd, chalked up a 17.3 per cent increase in pre-tax profit to RM84.727 million for the first half-year ended June 30, 2010, from RM72.231 million registered in the same period last year due to higher underwriting profit.

The group's revenue rose 12.2 per cent to RM423.510 million, during the period under review, from RM377.253 million recorded in the corresponding period on the back of increased premium income of 14.2 per cent, said Chairman Tan Sri Dr Teh Hong Piow in a statement Thursday.

He said LPI's earning per share for the six months period jumped to 47 sen from 42 sen previously.

Meanwhile, LPI's wholly-owned subsidiary, Lonpac Insurance Bhd, contributed RM63.7 million to the group's profit in the first-half of the year.

For the second-quarter ended June 30, 2010, the group's pre-tax profit fell 17.7 per cent to RM35.896 million, from RM29.994 million chalked up in the corresponding quarter, due to higher investment income received in the preceding quarter.

"Barring unforeseen circumstances, the group is confident of recording a satisfactory performance in the second-half of 2010," Teh said.

In consideration of the group's strong and commendable performance over the years, Teh said the board was proposing a one-for-ten rights issue of RM7.00 per share and a one-for-two bonus issue.

The proposals were, however, subject to the approval of relevant authorities.

The company also declared an interim single tier dividend of 10 sen per ordinary share.

LPI's total asset base rose 26 per cent to RM1.9 billion as at June 30, 2010.

"The group continued to create and enhance shareholder value through the efficient utilisation of its capital and increasing its return on equity while maintaining excellent corporate governance," Teh added.

-- BERNAMA

http://www.bernama.com/bernama/v5/newsbusiness.php?id=512025

Historical Investment Data of LPI (6.6.2010)

Historical Investment Data of  LPI (6.6.2010)
http://spreadsheets.google.com/pub?key=t2Nr2da6bA6VYYpXZT28xeA&output=html

LPI Capital at record high after Kenanga initiates coverage with buy call

KUALA LUMPUR: LPI CAPITAL BHD [] surged Monday, May 3 after Kenanga Research initiated coverage on the stock with a buy recommendation at RM15.04 and target price RM16.80.

http://www.theedgemalaysia.com/business-news/165189-lpi-capital-at-record-high-after-kenanga-initiates-coverage-with-buy-call.html

Kenanga Research initiates coverage on LPI Capital with buy call

Kenanga Research initiates coverage on LPI Capital with buy call

Written by Kenanga Research
Monday, 03 May 2010 08:56


KUALA LUMPUR: Kenanga Research has initiated coverage on LPI CAPITAL BHD [] with a buy recommendation at RM15.04 and target price RM16.80, and said it favours LPI the most among general insurers in Malaysia due to its well-diversified business portfolio enabling the company to minimise its operating risks and generates the highest return on equity (RoE) to reward shareholders.

The research house said the auto insurance segment is expected to turn around in 2010-11 with the proposed increase in premium rates and the change of motor tariff structure, which is a re-rating catalyst.

"We have not factored in the potential tariff hike in this report, however, we estimate every 5% increase in net premium, could increase LPI's earning by 9%," it said.

The research house said LPI has multiple distribution channels including its own agency network and tapping into Public Bank's 250 branch networks.

"We believe its faster-than industry's organic gross premium growth rate of 15%-16% is achievable," it said.

Kenanga Research said historically, LPI's premium has grown at a CAGR of 15% for the last 10 years.

"We estimate LPI now trades at 12.7 times FY11 PER, offers 6.2% net dividend yield and we forecast RoE of 17.2%; which is better than most of the banking stocks.

"We believe its business model of growing revenues at the calculated risk should sustain its earning growth of 12%-14% over next two years and efficient capital structure do offer a solid dividend yield story to investors," it said.

The research house said LPI deserved a valuation premium given stronger growth, higher margin, low investment risk, better market position; whilst the downside is well cushioned by its 6.2% net dividend yield.


Related:

A quick look at LPI

LPI

LPI Capital net profit up

LPI Capital Bhd posted a slight increase in net profit of RM 38.32 mil for its first quarter results ended March 31, 2010 as compared with RM 35.5 mil in the previous corresponding period.

It told Bursa Malaysia yesterday that the increase in the net profit was mainly due to higher underwriting profit.

A quick look at LPI

LPI Capital Berhad Company

Description:
LPI Capital Berhad. The Group's principal activity is underwriting fire, motor, marine, aviation, transit and miscellaneous insurance. Other activities include investment holding and financing lease. It operates through 16 local branches nationwide and three regional offices, as well as a foreign branch in Singapore.

Wright Quality Rating: DBA5






A quick look at LPI
http://spreadsheets.google.com/pub?key=tFgB3uBzdaZ9JPTy6H5To5w&output=html

A gem amongst the insurance sector.

Another Polished Gem in Teh Hong Piow's stable of companies

10-Year Group Financial Graphical Summary (Page 62 and Page 63 of Annual Report)
http://www.lonpac.com/annualreport08/LPI08_4.pdf

Over the last 5 years, the earnings per share have increased 3x.  Its share price has increased more than 2x.  Dividends over the last 5 years have also grown commensurate with the earnings, though these had been flat the last 2 years. 

The recent budget introduces a mandatory basic insurance coverage

Insurance

A basic insurance and takaful scheme will be offered to provide mandatory basic insurance coverage for third party bodily injuries and death. The scheme is expected to be introduced by mid-2010.

Positive for insurance companies (Kurnia (NR), LPI (NR)) and banks with major insurance subsidiaries such AMMB (AmAssurance)

http://malaysiainfoedgezone.blogspot.com/2009/10/market-strategy-after-budget-2010-full.html

http://www.box.net/shared/uj9jmp9h63

RHB maintains outperform call on LPI

RHB maintains outperform call on LPI

Tags: LPI | RHB

Written by The Edge Financial Daily
Monday, 12 October 2009 15:30

RHB Research has maintained its outperform call on LPI CAPITAL BHD [] with a higher fair value to RM14.95 following an upwards revision in its earnings forecast.

LPI recorded 3Q09 net profit of RM32.9 million, an increase of 44.7% quarter-on-quarter (q-o-q), which took its 9M09 earnings to RM91.1 million, up 27.3% year-on-year (y-o-y).

“This accounts for 80.2% and 82.7% of our and consensus expectations respectively. The deviation was mainly due to higher insurance gross premium and investment income at holding level,” RHB said. No dividend was declared in the quarter.

LPI’s 9M09 revenue grew by 11.9% y-o-y on the back of higher premium underwritten by Lonpac, which RHB believed was closely related to its expanding agency force and loan growth from PUBLIC BANK BHD [].

However, it said underwriting surplus was slightly below its expectation due to lower retained ratio against its assumption as a result of its fire-skewed portfolio, which the research house said has a lower retention rate versus motor, and higher management expenses due to increase in manpower.

RHB cut retention ratio to 35% from 34.5% and increased management expense to 19.8% from 19.5% previously. However, it noted that LPI’s 3Q09 underwriting surplus increased by 59.6% y-o-y, resulting in its 9M09 underwriting surplus to increase by 57.1% y-o-y.

“We believe this was caused by lower claims ratio, as economy has gradually improved, as well as its ability to obtain more retail business which is more profitable against lumpy underwriting,” RHB said.

It also increased the rate of return for investment at the holding level to 5.5% from 5% previously. Hence, earnings forecasts were increased by 2.3% to 10.1% per annum in FY09-11.

It added that LPI’s investment income in the quarter has expanded ten-fold q-o-q and 25.8% y-o-y. Going forward, it expected investment income from interest and dividend to remain a consistent contributor to overall earnings.

The fair value revision to RM14.95 from 13.58 previously is based on unchanged 15 times FY12/10 earnings per share.

http://www.theedgemalaysia.com/business-news/151122-rhb-maintains-outperform-call-on-lpi.html

LPI 15.10.2009

Valuation:
http://spreadsheets.google.com/pub?key=tsEGbxGIFeKgOmg39MSjr9w&output=html

HLG cool on insurers, but likes LPI Capital

HLG cool on insurers, but likes LPI Capital
Published: 2009/01/30

HLG Research is not too excited about the insurance sector, but it is telling investors to buy LPI Capital Bhd (8494) because the stock is a "sustainable yield play".

"LPI Capital continues to be well managed even during difficult times and is an attractive investment for yield-seekers and index outperformers," HLG wrote in a report.

The broker continues to like LPI due to its strong management, favourable insurance portfolio, income-protected investment assets, on-going capital management, further industry consolidation and index outperformance.

HLG has maintained a "buy" call on LPI shares with RM12.50 target price. The stock closed flat at RM10.30 yesteday.

LPI is expected to maintain its 8 per cent gross dividend yield, among the highest in Malaysia, from its relatively safe investments, HLG Research said.

"Its investment income is not expected to be significantly eroded by the 100 basis points cut in Overnight Policy Rates since November 2008," the report said.

LPI's management had also committed to sustaining over 100 per cent dividend payout ratio, the research said. The shares have outperformed the benchmark Kuala Lumpur Composite Index by 21 per cent over one year, HLG said.

HLG likes LPI's well-managed insurance portfolio with the strong risk and underwriting management.

"LPI has prudently trimmed exposure to the motor segment with only 60 per cent retention ratio for motor compared to 90 per cent for property insurance," the report said.

Property insurance continues to contribute the highest underwriting surplus due to the attractive pricing structure in Malaysia compares to the motor segment, it added.

LPI's investment returns will also stay resilient since 75 per cent of its investments is held in safe haven instrument that are shielded from the equity market, HLG said.

http://www.btimes.com.my/Current_News/BTIMES/articles/ciho/Article/

Reviewing LPI CAPITAL BHD share price performance in 2008

http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/a758a3f552e9dc30482575450025f6ca/$FILE/LPI-AnnualReport2008%20(2.3MB).pdf
Read:  Page 80/217 to 87/217

LPI CAPITAL BHD SHARE PRICE PERFORMANCE IN 2008

Q1, 2008
LPI Capital Bhd share price rose from RM12.10 as at 31 December 2007 to a year high of RM12.70 on 14 February 2008 following the announcement of its 2007 results on 13 February 2008. With its improved results, LPI Capital declared a final dividend of 55 sen per share less 26% income tax and a special dividend of 25% per share less 26% income tax. With the interim dividend of 30 sen less income tax of 26%, the total gross dividend declared for the year was 110 sen per share. The ex-dividend price was RM12.20 traded on 15 February 2008.

A sell down in regional and global equity market triggered by the sub-prime and credit crunch problems in US and coupled with results of the 12th general election held on 8 March 2008, LPI Capital share price fell to close at a low for the first quarter of 2008 at RM10.80 on 10 March 2008. This was the lowest price recorded for the first quarter of 2008.

The share price of LPI Capital remained at this level for the next two weeks before gradually improved in line with the general up trend of the KLCI to reach RM11.20 on the close of the first quarter.

Q2, 2008
The early second quarter saw LPI Capital share price hovering around RM11.30 and began to edge upward reaching RM12.30 on 13 May 2008. In line with the decline in local and regional equity markets on concerns of the rising inflation rate due to the increase in crude oil prices, LPI Capital share price corrected to RM11.80 at the close of the second quarter.

Q3, 2008
When the improved second quarter results were announced together with an interim dividend of 30% less 26% income tax on 10 July 2008, LPI Capital share price traded upwards moderately. After the payment of dividend the share prices consolidated to RM11.00 and this level was maintained till the middle of September. Thereafter the string of highly published failures of large financial institutions in US began to hound the equity markets and LPI Capital share price started to trend downwards in the last weeks of the third quarter. The share price closed at RM10.40 shedding a 9.5% in value.


Q4, 2008
In the last quarter of the year share prices in the regional and global stock market experienced sharp decline on the concerns of the fallout of the global financial crisis and global recession.

In tandem with the lower KLCI, LPI Capital share retreated to a year low of RM8.20 on 29 October 2008 before recovering and closed at RM9.45 for the year ending 31 December 2008.

In 2008, LPI Capital’s value in terms of market capitalisation declined by 21.25% or RM353.7 million to RM1,310.9 million compared to the decline of 39.3% of the KLCI. Based on the closing price on 31 December 2008 of RM9.45 and on the total gross dividend of 110 sen paid during the year, the shareholders would have enjoyed a gross dividend yield of 14% for 2008.