S&P500, EPS growth, Change in P/E. Relationship between Earnings and Valuation

 

This chart is titled "Earnings vs Valuation" and shows two overlaid time series from January 1996 through what appears to be late 2024 or early 2025, based on the x-axis.

Here's a breakdown of its elements and what it's communicating:

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1. What’s being plotted

• Right y-axis: Trailing EPS (Earnings Per Share) growth rate (year-over-year percentage change).

• Left y-axis: S&P 500 index level (logarithmic scale).

• Vertical shaded bars indicate recessions (based on NBER dating).

• Arrow lines mark peaks in EPS growth just before significant slowdowns or declines.

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2. Key observations from the chart

A) Earnings Growth 

• Highly cyclical, closely tied to economic recessions (gray bars).

• Sharp drops in EPS growth occurred during:

  • 2001 recession (dot-com bust)

  • 2008–2009 financial crisis (deepest drop, below –30%)

  • 2020 COVID-19 recession (brief but sharp fall)

  • 2022–? slowdown (post-pandemic, with inflation and tightening)

• Peak growth periods often precede downturns (marked by arrows).

B) Stock Market Valuation (Gray Line – S&P 500)

• Despite earnings volatility, the S&P 500 has trended upward over the long term (log scale shows consistent compounding).

• Notable corrections align with earnings recessions:

  • 2000–2002

  • 2008–2009

  • 2020 (brief)

  • 2022 (valuation reset as rates rose)

• Market doesn’t always fall when earnings slow if future growth is anticipated or rates are low (e.g., post-2010).

C) Recent Data (2022–2024)

• EPS growth peaked around late 2021 / early 2022 at very high levels (~50% year-over-year, likely due to post-COVID recovery and stimulus).

• Growth then slowed sharply through 2022–2023 but remained positive in late 2023 / early 2024.

• S&P 500 continued rising even as EPS growth normalized — suggesting valuation expansion (P/E multiple increase) possibly due to AI optimism, easing inflation expectations, or Fed pivot hopes.

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3. Interpretation & Discussion Points

1. Earnings cyclicality vs. market trend
   Earnings are much more volatile than stock prices in the long run. The market smooths out short-term earnings shocks by looking ahead.

2. Valuation expansion in late cycle
   In recent years (2023–2024), S&P 500 kept rising despite slowing EPS growth. This implies higher P/E ratios, which can be justified by lower interest rate expectations, technological disruption (AI), or liquidity. It also raises questions about market overvaluation if earnings don’t re-accelerate.

3. Peak growth as a signal
   Chart highlights that when EPS growth peaks at very high levels (e.g., >30%), it often precedes a slowdown or recession. The 2021–2022 peak was exceptionally high due to easy comps and fiscal stimulus — the subsequent deceleration was expected.

4. Forward-looking market
   The market often bottoms before earnings trough (e.g., late 2008/early 2009 rally before earnings recovered; 2020 March low before V-shaped EPS rebound).

5. Current context (end of chart)
   EPS growth appears to be modestly positive, S&P 500 near highs — suggests market betting on a soft landing and future earnings recovery rather than an imminent recession.

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4. Investment Implications

• Watching EPS growth momentum can help identify cycle turns.

• High valuation + decelerating earnings = potential vulnerability if macro deteriorates.

• Long-term investors benefit from looking through earnings cycles, as market trend has been upward despite periodic 30%+ EPS drops.

This chart essentially tells a story of short-term earnings volatility within a long-term bullish equity trend, with recent years showing a notable disconnect between earnings growth and market performance — likely driven by liquidity, interest rates, and long-term growth expectations.

This response is AI-generated

Johnson & Johnson: has a secure growing income stream and ability to deploy massive capital for high-return growth

Here is a comprehensive summary of Johnson & Johnson's financial statements and an overall assessment.

1. Income Statement Summary: The Earnings Story

• Core Business is Healthy & Growing: After the 2022 dip due to the Kenvue spin-off, revenue has returned to steady growth (4.3% in 2024). Underlying growth in Pharma and MedTech is solid.

• Exceptional Profitability: The company boasts a very high Gross Profit Margin (~69%), showcasing its pricing power and efficient production in high-margin healthcare sectors.

• Earnings Distorted by One-Time Events: Reported Net Income is heavily impacted by massive "Unusual Expenses" ($6.2B in 2024) and the 2023 spin-off gain. Look at EBITDA (~$28B, margin ~32%) for operational performance.

• Heavy Investment in the Future: R&D spending is high and increasing ($17.3B in 2024), reflecting commitment to the pharmaceutical pipeline.

• Recent Quarter (Q3 2025) Shows Strength: Excluding a one-time gain in Q1 2025, pretax income trended up to $7.5B in Q3 2025, indicating improving core operations.

Key Takeaway: The underlying business is robust and profitable. Ignore the noise from spin-off/restructuring costs; focus on sales growth and EBITDA margins.

2. Balance Sheet Summary: The Financial Fortress

• Extremely Strong & Conservative: The balance sheet is a key strength. Leverage is very low (Debt-to-Equity ~0.58), providing immense resilience and flexibility.

• War Chest of Liquidity: Cash holdings are substantial (~$18.6B) even after a major acquisition, providing dry powder for more strategic moves.

• Asset-Light, IP-Heavy Model: Assets are dominated by Intangibles ($96.8B, ~50% of assets) like patents and brands, not factories. This is typical for a pharma/medtech innovator.

• Shareholder-Friendly: An enormous Treasury Stock balance (~$75.9B) evidences decades of aggressive share buybacks, a core pillar of capital return.

• Post-Spin-Off Reshuffling: The surge and subsequent reduction in cash and short-term debt in 2025 show active liability management and strategic deployment of capital from the Kenvue separation.

Key Takeaway: J&J has a AAA-quality balance sheet. It is not just strong; it is a strategic weapon enabling bold M&A without undue risk.

3. Cash Flow Statement Summary: The Engine & Its Use

• Powerful Cash Generation: Operating Cash Flow (OCF) is the engine, generating a massive ~$24B annually with superb margins (25-28% of Sales). Earnings are high quality and convert to cash.

• Disciplined Investment: Capital Expenditures are low (~4-5% of Sales), but Strategic Acquisitions are significant ($15.1B in 2024, $14.5B in Q2 2025). This is how J&J buys growth.

• Predictable, Generous Shareholder Returns: Dividends are sacrosanct, steady, and growing (~$11.8B annually). Share buybacks are consistently executed.

• Prudent Financing: Debt is used strategically to fund large acquisitions (e.g., $15.1B issued in Q1 2025), which is then rapidly paid down from the copious OCF.

• Strong Free Cash Flow: Annual Free Cash Flow is consistently robust ($17-20B), funding all priorities comfortably.

Key Takeaway: J&J follows a classic blue-chip cash cycle: Generate massive OCF → Fund growth via M&A → Return all excess cash to shareholders. The model is executed flawlessly.

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Overall Financial Summary & Investment Thesis

Johnson & Johnson is a financially elite company transitioning strategically from a diversified conglomerate to a focused healthcare innovator.

• Financial Health: Excellent (A+). The combination of high profitability, a fortress balance sheet, and immense, predictable cash flows places J&J in the top tier of corporate financial health globally. There is minimal solvency or liquidity risk.

• Strategy & Capital Allocation: Clear and Active.

  1. Invest for Growth: Major, ongoing R&D spend combined with bold, bolt-on acquisitions (evident in 2024-2025 cash flows) to strengthen Pharma and MedTech.

  2. Return Capital Reliably: A dependable, growing dividend and consistent share buybacks.

  3. Maintain Financial Strength: Using debt strategically but always quickly returning to conservative leverage ratios.

• Investment Profile:

  • Defensive Core: Provides stability through reliable dividends and recession-resistant cash flows.

  • Growth Optionality: Offers potential for acceleration through its R&D pipeline and strategic M&A, funded by its unparalleled balance sheet.

  • Low Risk: The financial structure inherently reduces downside risk.

Bottom Line: Johnson & Johnson is not just weathering its corporate transformation; it is leveraging its unparalleled financial strength to aggressively shape its future. An investor is buying a secure, growing income stream coupled with a call option on management's ability to wisely deploy a massive war chest for high-return growth. The primary watch item is no longer the spin-off—it is the execution and integration of its new acquisitions.

The AI MARKET Will COLLAPSE SOON!" – Warren Buffett's URGENT WARNING

 

Summary: Warren Buffett's Urgent Warning on the AI Investment Bubble

Core Thesis

Warren Buffett delivers a stark warning that the current AI investment mania mirrors historical speculative bubbles and is headed for a major crash. While acknowledging AI's transformative potential, he argues that stock prices have become completely detached from business fundamentals.

Key Evidence of a Bubble

1. Extreme Spending: Tech giants are spending $450 billion on AI this year alone—an unsustainable amount driven by competitive fear rather than sound economics.

2. Insane Valuations: Examples include:

   • Nvidia at $5 trillion (more than Germany's economy)

   • OpenAI valued at $500 billion with only $13B revenue

   • Companies spending $9 to make $1 (like losing money on every lemonade sale)

3. Historical Parallels: This pattern matches:

   • The 2000 dot-com crash (NASDAQ fell 78%)

   • The 1970s "Nifty Fifty" bubble (blue chips fell 70-90%)

   • The 1920s automobile/radio bubbles

4. Concentrated Risk: Seven stocks account for 75% of market gains—a dangerous concentration Buffett calls a "house of cards."

5. FOMO-Driven Market: 1,500 AI startups valued over $100M despite 70% having no path to profitability.

How the Crash Will Unfold

1. Trigger: A minor disappointment from a major player (Microsoft, Google, etc.) breaks the "this time is different" narrative.

2. Cascade: Professional investors and algorithms trigger automated selling, creating a downward spiral.

3. Capitulation: Regular investors panic-sell at the bottom, locking in catastrophic losses.

Timeline: Buffett predicts this within 6-18 months.

What to Do Instead: Buffett's Conservative Strategy

1. Buy Profitable Businesses: Focus on companies with strong brands, pricing power, and actual earnings (like Coca-Cola).

2. Hold Significant Cash: Treasury bills yield 4-5% risk-free. Berkshire holds $300B in cash waiting for better opportunities.

3. Practice Extreme Patience: If you believe in AI, wait 2+ years for rational prices. The technology will still exist.

4. Stick to What You Understand: Never invest in complex businesses just because they're popular.

5. Prioritize Capital Preservation: A 50% loss requires a 100% gain just to break even. Avoid big losses above all.

Final Reality Check

• The technology will survive (like the internet after 2000), but speculative valuations will collapse.

• The "basic rules of investing never change": Price vs. value, margin of safety, and business fundamentals still matter.

• This time is NOT different—emotional investing (FOMO) always ends badly.

Immediate Action Items for Investors

1. Reduce exposure to hyper-valued AI stocks

2. Increase cash and treasury holdings

3. Rebalance toward profitable, durable businesses

4. Commit to not buying AI stocks for at least a year

5. Study proper business valuation principles

Bottom Line: The AI revolution is real, but the stock bubble isn't. Protect your capital now so you can buy quality assets at reasonable prices after the inevitable correction. As Buffett concludes: "Price is what you pay. Value is what you get. Right now, people are paying way too much and getting way too little."

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Based on the video transcript from 0 to 10 minutes, here are the main points and a summary:

Main Points (0-10 Minutes):

1. Massive, Unprecedented Spending: The biggest tech companies (Microsoft, Amazon, Google, Meta) are spending a collective $450 billion on AI this year alone. Buffett frames this as an amount that could "fund entire countries."

2. Historical Parallels: Buffett states he has seen this pattern three times before in his 95 years, and it "does not end well for the people buying at the top." He warns that when everyone runs in the same direction, they are often "running toward a cliff."

3. Anecdote of Mania: He shares a story of a young man who put his entire retirement into AI stocks and wanted to take out a loan to buy more, illustrating the speculative fever and "FOMO" (Fear Of Missing Out).

4. Technology vs. Investment: He clarifies that the AI revolution is real and will change the world, but that does not automatically make the stocks a good investment at any price.

5. The Dot-Com Bubble Comparison: Buffett recalls the 2000 internet bubble, where he was criticized for not buying companies with no profits. He emphasizes that while the internet changed everything, it did not change the "basic rules of business" or mathematics. The NASDAQ subsequently fell 78%.

6. Identical Patterns Emerging: He draws direct parallels between the AI boom and the dot-com bubble:

   • Overcapacity: Like the "dark fiber" glut of the 1990s, he implies today's AI infrastructure build-out could face the same fate.

   • Sky-High Valuations: He cites Nvidia's $5 trillion valuation (more than Germany's economy) and OpenAI's $500 billion valuation against only $13B in projected revenue as examples of prices disconnected from fundamentals.

   • Circular Financing: He points out Nvidia investing in startups that then use the money to buy Nvidia chips, similar to circular financing seen in the telecom bubble.

   • Massive Losses: Highlights that OpenAI is spending $60B to make $13B, likening it to a lemonade stand that loses $8 on every $1 sale.

7. Incentives of Fear: He argues the spending spree is driven not by clear profit paths but by fear—each giant is terrified of being left behind by the others.

8. Concentrated & Unhealthy Market: Notes that just seven stocks ("Magnificent Seven") account for 75% of the market's gains, calling it a "house of cards" and a sign of dangerous territory.

9. The "Nifty Fifty" Lesson: References the 1970s bubble in blue-chip stocks (like Polaroid, Xerox) to prove that even wonderful companies can be terrible investments if you pay too much for them.

10. Startup Bubble: Mentions 1,500 AI startups valued over $100M, with 70% losing money and no path to profitability, sustained only by FOMO.

Summary (0-10 Minutes):

Warren Buffett issues a stark warning that the current AI investment boom is a speculative bubble identical to those he has witnessed and survived throughout history, most notably the dot-com crash. He acknowledges AI's transformative potential but argues that investor frenzy has driven stock prices to unsustainable levels that violate fundamental business principles. He provides specific, alarming examples of overvaluation, wasteful spending, and circular economics, comparing them directly to companies that failed in 2000. Buffett contends the market is driven by fear of missing out rather than rational analysis, leading to a dangerously concentrated market poised for a major correction. His core message is that a revolutionary technology does not justify paying any price for it, and he urges extreme caution.

Based on the video transcript from 10 to 20 minutes, here are the main points and a summary:

Main Points (10-20 Minutes):

1. Unhealthy Economic Dependence: A troubling statistic is cited: AI spending now accounts for over half of U.S. economic growth. Buffett argues this is not normal or healthy, as growth should come from genuine consumer demand and productive investment. He warns the entire economy is vulnerable when this unsustainable spending stops.

2. The "Nifty Fifty" Precedent: He elaborates on the 1970s "Nifty Fifty" bubble to reinforce his point: even excellent, world-changing companies (like Polaroid and Xerox) can crash devastatingly (90%, 70%) if investors pay absurdly high prices for them. The lesson: "It does not matter how good a company is if you pay too much for it."

3. The Prevalence of FOMO: Buffett labels the current environment "FOMO investing"—driven by emotion (fear of missing out) rather than logic. This causes investors to stop asking critical questions about profitability, technology risks, and downside.

4. Charlie Munger's Wisdom: He invokes his late partner's principles:

   • "Show me the incentives and I will show you the outcome": The incentive now is fear of being obsolete, not sound capital allocation.

   • "All I want to know is where I'm going to die, so I never go there": The obvious mistake to avoid is paying too much, even for something good.

5. The "Margin of Safety" Principle: Buffett recalls the core teaching of his mentor, Ben Graham. Investing requires a "margin of safety"—buying at a price significantly below intrinsic value to protect against errors. He asserts that current AI prices have no margin of safety; they assume perfect execution.

6. Prediction: How the Crash Will Unfold: Buffett outlines his forecast for the bubble's burst in three stages:

   • Stage 1 - The Trigger: A small, negative catalyst (e.g., a major tech company reporting disappointing AI revenue or cutting spending) breaks the market's psychological spell ("this time is different").

   • Stage 2 - The Cascade: Professional investors and algorithmic trading begin rapid, automated selling, creating a self-reinforcing downward spiral in prices.

   • Stage 3 - Capitulation: Regular investors, who held on hoping for a rebound, finally give up and sell at the bottom, locking in catastrophic losses.

7. Why This Bubble Could Be Worse: He states this bubble is potentially more dangerous than the dot-com bubble because:

   • The scale is larger ($450B annual spend vs. peak internet spend).

   • Concentration is higher (money and growth tied to just a few companies).

   • The ripple effects through the supply chain (chips, data centers, utilities) will be severe when spending halts.

8. Rebuttal to "Bull" Arguments: Buffett systematically counters common pro-AI investment arguments:

   • "AI is revolutionary": So were railroads and radio, which also had bubbles.

   • "They are great companies": Even great companies can be overpriced.

   • "Everyone is making money": This was also true at the peak of previous bubbles and is a warning sign, not an invitation.

   • "You can't time the market": True, but there's a difference between timing and refusing to pay a ridiculous price for an asset.

Summary (10-20 Minutes):

In this section, Buffett transitions from diagnosing the bubble to predicting its collapse and defending his thesis against optimistic counter-arguments. He paints a picture of an economy overly reliant on speculative AI investment, setting the stage for a painful correction. He explains the psychological and mechanical process of how the crash will likely occur, drawing on historical patterns. Importantly, he grounds his warning in timeless investment principles from Graham and Munger—the necessity of a "margin of safety" and the danger of ignoring valuation. He forcefully argues that the revolutionary nature of AI does not suspend these fundamental rules of business and investing. The core message is that the current market is built on emotion and flawed assumptions, not rational valuation, making a severe downturn inevitable.

Based on the video transcript from 20 to 30 minutes, here are the main points and a summary:

Main Points (20-30 Minutes):

1. Practical Advice: What to Do Instead – Buffett shifts from warning to actionable advice, outlining a conservative strategy:

   • Buy Profitable Businesses Now: Focus on companies with strong brands, pricing power, low debt, and high returns—like Coca-Cola. They may be "boring" but are durable.

   • Hold More Cash: With Treasury bills yielding 4-5% risk-free, cash is a prudent option in a speculative market. He notes Berkshire Hathaway is holding over $300 billion in cash, awaiting better opportunities.

   • If You Believe in AI, Wait for Better Prices: The technology will still exist in a few years, but the stock prices will likely be more rational. Emphasizes patience as a key investor virtue.

   • Focus on What You Understand: Avoid investing in complex businesses you don't grasp, just because they're popular.

   • The Goal is to Avoid Big Losses: He stresses that the math of losses is brutal (a 50% loss requires a 100% gain to break even). The primary goal is capital preservation, not hitting home runs.

2. Specific Forecast for the Next 1-2 Years – Buffett predicts the bubble will pop within 6 to 18 months. The trigger will be a major tech company reporting disappointing AI results (e.g., Microsoft's Copilot, Google's AI search). This will break the market narrative, leading to analyst scrutiny, media criticism, and a shift from greed to fear.

3. The Aftermath: Survival and Lessons – He clarifies his view on the outcome:

   • The Technology Survives: AI, like the internet after the dot-com crash, will continue to develop and change the world.

   • The Weak Companies Vanish: Many overvalued AI startups with no path to profit will disappear.

   • The Strong Companies Endure: Giants like Microsoft and Google will survive due to their core, profitable businesses.

   • The Stock Prices Crash: The investment bubble will deflate, and people will look back in hindsight, baffled by the hype and prices they paid.

4. The Courage to Be Contrarian – Buffett reflects on the social pressure of bubbles, noting it takes courage to stand aside when everyone else is jumping in. He recalls being called a "dinosaur" for avoiding internet stocks in 1999, but being vindicated by 2002.

Summary (20-30 Minutes):

In the final segment, Warren Buffett moves from diagnosis and prediction to prescribing a defensive investment strategy for the impending downturn. He advises viewers to seek safety in profitable, understandable businesses and cash, and to exercise patience rather than chase the AI frenzy. He reiterates his conviction that the bubble will burst soon, initiated by a reality check from a major player, and outlines the likely aftermath where the technology persists but speculative valuations collapse. He concludes by emphasizing that the timeless, fundamental rules of investing—buying value, avoiding overpayment, and preserving capital—remain unchanged and are the surest path to long-term safety and success. His final call to action is to resist crowd psychology and the fear of missing out.

Maybank Lifts ZETRIX Target Price After Launched Malaysia’s First Stablecoin on Its Platform

Maybank Lifts ZETRIX Target Price After Launched Malaysia’s First Stablecoin on Its Platform, Sees 152% Upside

Publish date: Wed, 10 Dec 2025, 01:05 PM

Maybank Investment Bank analyst Lucas Sim has raised Zetrix AI’s target price to RM2.03 from RM1.66 and implying a potential upside of 152%, while maintaining a Buy call. The revision came after Bullish Aim, chaired and owned by the Regent of Johor, recently launched RMJDT (Malaysia’s first Ringgit-backed stablecoin), issued on the Zetrix blockchain platform.

RMJDT was launched under a regulated sandbox framework and is designed to serve a dual purpose to strengthen the use of MYR in cross-border trade settlements and as a catalyst for attracting increased FDI into Malaysia.

Lucas highlighted Bullish Aim’s plan to establish the Digital Asset Treasury Company (DATCO), to ensure stable network gas fees for RMJDT transactions, which initially allocates RM500 million in Zetrix tokens, potentially boosting FY26–27 earnings of Zetrix AI. He now projects FY26E earnings to rise 39% to RM1.19 billion, driven by the token sale.

​Lucas Sim, who mainly covers the industrial products & services sector on StockTipRatings.com (based on data since 2023), currently does not yet have an Expert Rating on the platform. However, he records a 40% success rate across the stocks he covered over a 1-year period following his calls.

He added that the RM500 million allocation could rise to RM1 billion, and DATCO’s commitment to stake tokens supporting up to 10% of validator nodes would further enhance network stability and efficiency. These initiatives strengthen Zetrix AI’s earnings visibility, supported by growing blockchain adoption within the new stablecoin ecosystem.

As of 10:30 a.m. on December 10, Zetrix AI's share price rose 6.2% to RM0.855.

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What Happened:
A bank analyst (Maybank) has become very bullish on a company called Zetrix AI. He doubled his price target because Zetrix's blockchain was chosen to launch Malaysia's first government-backed digital Ringgit (RMJDT).

Why It's a Big Deal:

1. Official Backing: This isn't just any crypto. It's a regulated digital currency supported by Malaysia (through the Regent of Johor), meant to be used for international trade.

2. Guaranteed Customer: A special fund (DATCO) will buy RM 500 million worth of Zetrix's own digital tokens to help run the new system. This is a huge, immediate sale for Zetrix AI, boosting its profits.

3. New Role: Zetrix is no longer just a tech company. It's now becoming essential national financial infrastructure.

The Bottom Line:

• Opportunity: This is a major upgrade for Zetrix. It has a clear new customer (the government project) and a big revenue stream from the token sale. Its future is now tied to Malaysia's digital economy plans.

• Caution: The analyst making this super-bullish call doesn't have a strong past track record (40% success rate). Also, the company must now successfully deliver on this project, which isn't guaranteed.

In a nutshell: Zetrix AI got a huge vote of confidence by being chosen for a national digital currency project, which should make it a lot of money. The stock jumped on the news, but it still has to prove it can make the project work.

LPI shining bright on lucrative fire segment

PETALING JAYA: LPI Capital Bhd, a general insurer 44%-owned by Public Bank Bhd, has met market expectations as it announces a “strong set of earnings” for the first nine months of financial year 2025 (9M25).

“LPI has impressed us by displaying extremely strong gross written portfolio growth primarily driven by its high profitability fire segment, despite weaker retail loan growth seen recently,” MBSB Research said in a note to clients.

It pointed out that there was a sharp increase in combined ratio, which was already guided for.

“Increased competition within the general insurance space and adverse weather conditions could put a damper on LPI’s fundamental outlook.”

In a separate note, Kenanga Research said LPI’s net profit of RM296mil in 9M25 made up 77% of consensus’ full-year forecast. Year-on-year, LPI’s 9M25 net earnings declined slightly by 2%.

In spite of higher insurance service revenue, mainly led by stronger demand for fire class insurance products, insurance service results declined by 8% from a lower average retention ratio of 68.9%.

“We opine this was led by revisions to key actuarial assumption where 9M24 predominantly saw reversals.

“Quarter-on-quarter, net profit for the third quarter of this year surged by 38% mainly from the sequential boost in dividend income of RM35.9mil during the quarter. Adjusting for dividends, earnings would have grown by 11% instead, which is in line with the 13% improvement in insurance service results,” stated Kenanga Research.

Meanwhile, CIMB Research said it has raised its net profit forecasts for the financial years of 2025 to 2027 by 5.6% to 11.7%.

This was done as the research house raised LPI’s top-line revenue forecasts by 2.5% to 5% for the fire insurance class.

It has also raised its target price for LPI to RM14.60 from RM14.37 previously.

“Our ‘hold’ call remains unchanged, supported by sustainable annual dividends (payout ratio: 85%) and the prospect of a special dividend amounting to RM2 per share from the mandatory sale of 212.1 million Public Bank shares.

“As we believe these developments have been priced in, we see limited share price catalysts in the near term,” said CIMB Research.

LPI is planning to sell its 1.13% stake in Public Bank, worth some RM923mil. The disposal mandate timeline has been extended to June 3, 2026 from Dec 4, 2025.

While the deadline to dispose of Public Bank shares had been extended by six months, Kenanga Research said its medium-term view for special dividend yields of about 11% remained undeterred as any distributions will likely be phased out.

Based on the intended distribution of about 70%, this equates to a potential special dividend payout of RM1.62 per share.

Looking ahead, Kenanga Research said that LPI is poised to see synergistic gains from more collaboration with Public Bank.

It also anticipated minimal impact from the eventual implementation of healthcare reforms given the group’s minor exposure of less than 10%.

“Maintain our ‘outperform’ rating and target price of RM16 per share.

“LPI’s premium valuation may also be supported by its long-term viability from its affiliation with Public Bank with the pending solidifying of synergies,” it added.

30.10.2025

https://www.thestar.com.my/business/business-news/2025/10/30/lpi-shining-bright-on-lucrative-fire-segment