INDUSTRY WATCH- INSURANCE
Let us take a look at the insurance
sector on the Nigerian Stock Exchange, a sector that is not only in the shadow
of itself but also lagging behind. The sector contributes less than 5% to the total
Market capitalization of the Nigerian capital market despite having the
highest number of companies under its domain. The sector in a general view
consists of about thirty companies. However in order to make them comparable I grouped
the companies into two.
Group A consist mostly of
Insurance companies that seldomly move or change in price. Everything about most
of these companies is .50k. Their current Price is .50k, their 52Wks high is
.50k 52wks low is .50k. Above all most of
these companies do not have any 2013 quarters result to work on. Companies in
Group are listed below-
Group B thus consists
of insurance companies that are liquid and has price volatility. A comparative
look at the companies in this group is shown below-
International Energy Insurance and Wapic which should be
included were not included due to unavailable 2013 quarters result.
A look at the Gross premium (Total Income) and PAT of each
Company
The amount each company is generation per each unit of
shares.
The Profit Margin
of each firm.
The earnings each company retained per each unit of
shares.
The price to earnings ratio of each firm.
The Return on Equity of each firm.
Current Price of each company against their Book Value.
Price to book value of each company.
Technical comparison of each company based on Current price,
52weeks high and 52weeks low.
INFERENCES
AIICO- The numbers of Aiico is not looking excellent, the
company had a 57% Q3 QoQ drop in PAT which accounts for it having the lowest
profit Margin in the group.
CONTINENTAL INSURANCE- The current numbers it possesses
makes it current price expensive.
CUSTODIAN &
ALLIED- The numbers of Custodian look good but its share price is already
close to its 52wksH which makes me doubt a possible rise in its share price in
the short term
CONERSTONE- The PE of cornerstone insurance looks a little
on the high side and other ratios are not really encouraging but putting into
consideration that this company move from QoQ pat of 2012 PAT of (71m) to a 2013
PAT of 416m makes it a company to put on a watch list.
LAW UNION –The numbers of Law Union also makes it a company
to put on the watch list, the company was also able to move from a negative PAT
to a positive PAT on a QoQ basis
MANSARD- Formerly GT Assurance, it’s a company that is
selling at a premium due to the values it has created for itself, from
effective management to duly rewarding investors with interim and final
dividend year in year out. Appeared expensive yet I will not be surprised if
the stock sell at N3 in the medium term. The company made a 51% increase in it
PAT on a Q3 QoQ basis.
NEM- My feeling about NEM can be deduced from my tweet about
it some days ago
Owolabi
Afeez @1himself Jan17
How I wish #NEM isn't in d #Insurance sector.EPS-.39k FEPS-.52k RVS-1.2 PE-2.1
FPE-1.5 BV-1.2 PBV-.69 ROE-33% PatM-32% can u beat that? #NSE
|
NEM is the stock
with the lowest PE in the insurance sector and in the entire Nigeria Stock
Market.
PRESTIGE- Prestige
numbers looks good.
ROYALEX- Royalex
numbers looks attractive.
Conclusion.
I have been in the market for a
few years now and I know the general
apathy towards the insurance sector due to some valid reasons (Cooperate
governance issues, lateness of releasing of result, releasing of Year end
result that will not be in line with released quarter result and so on). I however
vehemently feel they are Companies in this same sector with bargains that are
too strong to be ignored. I will advise a pick of one or two out of the entire
sector which should then be looked into critically for a possible BUY
consideration.
BEST OF LUCK AND HAPPY
INVESTING…
NOTE-
The groupings was
only done to make this write-up easy for me, it doesn’t segregate any of the
company as good or bad.
NEM forms a big
portion of my portfolio so any of my biased appraisal of it should be
adequately ignored.
The Inferences are based on my personal feelings and adjudication of each company. It therefore should not be solely used in making any investment decision
Critiques, Comments,
Advise and Questions will positively received.
Twitter- @1himself
ADDENDUM- I have an uncontrollable urge to dedicate this to Nigeria Most UNIQUE investor PETER IYEN who we all felt was out of sense when he laid so much emphasis on the insurance sector. He his really a mentor that i learn from even if we both dont concur most times.
Peter Iyen is on on twitter via- @nse_investor . His blog is full of interesting and eyes-opening write-ups, visit
http://www.globalnigerian.com