Wednesday, January 10th, 2018


LPI Capital posts better Q4 results

PETALING JAYA: LPI Capital Bhd’s net profit in the fourth quarter ended Dec 31, 2017 (Q4’FY17) increased 1.9% to RM83 million, from RM81.45 million in the previous corresponding quarter, mainly contributed by profit from the general insurance segment, which rose 4.3% to RM110.4 million.Revenue was up 2.2% to RM363.5 million compared with RM355.6 million in the same period in FY16.

Underwriting profit for the quarter grew 2.3% to RM93.2 million from RM91.1 million previously on the back of 8% growth in net earned premium income.

LPI’s full-year net profit dropped 28.2% to RM313.8 million against RM437.2 million in FY16, mainly due to the absence of non-recurring gains. Revenue soared 6.7% to RM1.47 billion from RM1.38 billion previously.

In view of the strong performance of the group, the group has declared a second interim dividend of 45 sen per share, which amounts to RM149.4 million.

Together with the first interim dividend of 27 sen per share amounting to RM89.6 million, which was paid in August 2017, the total dividend for FY17 of RM239 million represents 76.2% of the group’s net profit attributable to shareholders.

On prospects, the group’s founder and chairman Tan Sri Teh Hong Piow said the liberalisation (framework) process will continue to pose new challenges to the insurance industry.

“We are nevertheless confident that the group will be able to ride the challenges and take advantage of the opportunities presented to report another favourable performance for 2018,” he said in a statement.

Separately, LPI told Bursa Malaysia that it has proposed to undertake a bonus issue on the basis of one bonus share for every five existing shares held by shareholders.

The bonus issue, which entails an issuance of up to 66.4 million new shares, will be implemented by way of capitalisation of RM6.26 million from the share premium account and the remaining RM60.14 million from the retained earnings account.

LPI’s share capital will increase from RM338.24 million comprising 331.98 million shares to RM398.38 million comprising 398.38 million shares.

The exercise aims to reward the group’s existing shareholders for their loyalty and continuous support and increase the group’s share capital to a level which will better reflect its current scale of operations and assets employed. The bonus issue is expected to be completed in the second quarter of 2018.

LPI shares closed 56 sen or 3% higher at RM19.42 today on some 187,300 shares done.

Expensive valuations keep consumer sector in ‘neutral’

PETALING JAYA: Despite consumer spending expected to be stimulated with BR1M (1Malaysia People’s Aid) payments, tax cuts, and other cash handouts this year, Hong Leong Investment Bank (HLIB) Research is retaining its “neutral” rating on the consumer sector for 2018 as the consumer stocks are already trading at historical highs.

The KL Consumer Index currently trading at 32 time price-earnings (P/E) or two standard deviations above its five-year average P/E of 23.5 times.

The research house said consumer sentiment rebounded slightly last year as consumer spending continued to normalise after the implementation of Goods and Services Tax in April 2015. However, the consumer sentiment index stayed below the threshold level due to a weaker ringgit, with concerns still revolving around the economy and job worries.

Alarmingly, 83% of Malaysians still believe the nation is in a recessionary state according to Nielsen, it noted.

HLIB Research expects consumer staples will benefit from improved consumer spending in 2018.

On the other hand, HLIB Research is of the view that Berjaya Food Bhd’s (BFood) Starbucks Malaysia operations will benefit from the stronger ringgit this year, as 40% of the Starbucks’s cost of goods sold (coffee beans, frappuccino mix) are denominated in US dollar.

Therefore, it advises investors to invest in companies that will benefit from the strengthening ringgit, which is projected to average between RM4.00 and RM4.20 against the US dollar this year against RM4.30 in 2017.

HLIB Research is also positive on the brewers sub-sector due to healthy dividend yields, the unlikelihood of an alcohol excise hike in 2018 and the occurrence of the World Cup, which would boost beer consumption.

HLIB Research’s top picks include BFood and Carlsberg, with a target price of RM2.12 and RM17.90 respectively.

Ayer expects property demand to rebound

PETALING JAYA: TAHPS Group Bhd, which rebranded itself to Ayer Holdings Bhd today, expects property demand to return in the second half of this year on better domestic sentiment and economic growth.

Group CEO Eugene Khoo said the country’s economic performance was on track and this would translate to consumer confidence and in turn promote big-ticket purchases.

“The property market is (currently) looking at consolidation because there are many unsold stock being carried by developers.

“Thus, developers need to be smart in launching new projects, taking into account demand for the right product, location and pricing,” he told reporters at the Ayer Holdings rebranding launch in Puchong today.

The company, via its property arm Bukit Hitam Development Sdn Bhd, also plans to launch affordable landed and high rise homes in Bukit Puchong.

Khoo said the company also aims to collaborate with healthcare and education providers for its townships.

On the rebranding, Khoo said it is an important step for the group for the masses to identify it as a real estate brand, as the original name was quite a mouthful.

He said Ayer was a real estate group with a track record of delivering on time and on budget, alongside a history of solid, steady growth. – Bernama

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