Strong Performance, Maintain BUY (TP: RM14.52)
LPI Capital had a stellar FY24, driven by Malaysia’s economic recovery. Despite external risks such as geopolitical tensions and climate change, prudent underwriting and customer service are expected to mitigate challenges. As part of the PBB corporate family, LPI has more opportunities for cross-selling and process automation.
Key Highlights for LPI Capital
Earnings Growth: FY24 PAT grew +20% YoY, despite flat insurance revenue, mainly due to higher general insurance profit (+18% YoY).
4QFY24 Core NP: Fell -40% QoQ due to higher reinsurance costs and lower investment returns. However, 3Q is typically the strongest quarter.
Revenue Stability
Increased +1.1% YoY to RM1,926.6m, with 97.7% from general insurance and the rest from investment holding (which saw a +42.4% YoY increase due to higher dividends).
Gross Written Premium (GWP): FY24 GWP grew +7% YoY to RM1,860m, though 4QFY24 dipped -7% QoQ, aligning with seasonal trends.
• Improved Combined Ratio: 72.2% (-4.7ppt YoY) due to lower claims.
Outlook & Risks
Forecasts remain unchanged with confidence in LPI’s strategic direction.
Downside risks: Weak investment returns, higher claims, and external market conditions.
LPI’s strong fundamentals, cross-selling opportunities, and process enhancements justify maintaining a BUY rating with a target price of RM14.52. – Source: MIDF
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