Finweek English Edition - - INVESTMENT -


BUY SBG Se­cu­ri­ties has a negat i ve v i ew on t he i nsurance group. This fol lows a sharp sel l- off in the share fol­low­ing an op­er­a­tional up­date from MMI. Highly-re­garded in­sur­ance an­a­lyst Risto Ke­tola noted: “Our sum- of-t he-parts val­u­a­tion of MMI stands at R20.87 (from R21.31) and our 12-month price t ar­get has been re­duced ac­cord­ingly to R22 (from R22.50). The 50cps re­duc­tion in the price tar­get should be seen in light of the 51cps div­i­dend paid since our pre­vi­ous MMI re­port. The neg­a­tive im­pact from ad­just­ments to per­sis­tency and busi­ness mix has been off­set by some up­lift to the vol­ume forecasts and also favourable eq­uity mar­ket moves over the past six weeks.

Our fair value i mplies t hat MMI should be trad­ing at just be­low 1x EV (which would still be above ‘norm’ for SA in­sur­ers) rather than at the cur­rent 20% pre­mium. We main­tain our ‘Sell’ rec­om­men­da­tion on MMI.”

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