LPI will be able to improve performance

KUCHING: Analysts have maintained their positive stances on LPI Capital Bhd (LPI), believing that the group will be able to improve its performance despite the first half of financial year 2018 (1HFY18) net profit coming in below expectations.

As per LPI’s filing on Bursa Malaysia, the group’s net profit attributable to shareholders stood at RM138.2 million for the first half year ended June 30, 2018, slightly down from RM138.6 million in the corresponding period ended June 30, 2017.

LPI’s first half of 2018 (1H18) net profit of RM140 million was below Affin Hwang Investment Bank Bhd’s (AffinHwang Capital) expectations due to higher claims incurred and weaker margins against the research firm’s projection.

The group’s 1HFY18 earnings also came in below the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) and consensus expectations, accounting for 41.9 per cent and 38.6 per cent of full year estimates.

Despite LPI’s latest financial performance, MIDF Research believed improvement on the group’s overall earnings is possible given the group’s strong business presence in both motor and fire segments.

“We opine that the group will be able to improve its performance primarily due to its strong presence, in fire and motor insurance segments,” the research arm said.

“While we remain optimistic, we believe the industry’s headwinds post liberalisation will continue to be a challenge which will put pressure on further growth.”

MIDF Research also opined that LPI will be able to continue strengthen the group’s market share in the general insurance market, supported by its standing as the country’s largest property underwriter.

“This will likely provide strong revenue base for the group moving forward.”

Similarly, Af finHwang Capital continued to like LPI for being the market leader in the general insurance segment with approximately an eight per cent market share while continue seeing steady premium growth amidst a more competitive market (under the second phase of industry detarrification), disciplined underwriting and superior margins.