LPI’s 4Q18 performance to be repeat of 3Q18

KUCHING: Analysts believe that LPI Capital Bhd's (LPI) fourth quarter of 2018 (4Q18) will be a repeat performance of 3Q18, while others are remaining neutral on the group's business in spite of the recent economy slowdown and uncertainty.

LPI's 3Q18 net prof i t attributable to shareholders amounted to RM91.81 million, down from RM92.17 million in the corresponding period of the previous year.

Affin Hwang Investment Bank Bhd ( AffinHwang Capital), which saw a favourable quarter in 3Q18, viewed the group's first nine months of 2018 (9M18) net profit of RM230 million as within the research firm's expectation.

It accounted for 71 per cent of the research firm's financial year 2018 estimate ( FY18E) net profit estimate of RM322.2 million.

“We expect 4Q18 to perhaps repeat the performance of 3Q18, on the back of management's move to exercise more caution in motor risk-underwriting as well as continue to focus on the roll-out of more comprehensive fire insurance products, amidst a more liberalised market,” AffinHwang Capital projected.

Meanwhile, the research arm of MIDF Amanah Investment Bank Bhd's (MIDF Research) outlook on LPI's business remained rather neutral in spite of the recent economy slowdown and uncertainty.

“Despite the recent economy slowdown and uncertainty, our outlook on the group's business remains rather neutral at this juncture as it has a track record of financial strength and profitability to cushion imminent downside scenario risks.

“The group also has a ratio of cash flow from operating activities to net income of 126.5 per cent (RM291 million/RM230 million), indicating sufficient cash flow to meet its obligations and even pay dividend to its shareholders,” MIDF Research said.

That said, MIDF Research took note of the potential headwinds from the liberalisation of motor and fire tariff and current uncertain environment affecting the infrastructure landscape where LPI is an active player.