OSK Research upbeat on LPI’s venture in Cambodia
PETALING JAYA: OSK Research Sdn Bhd is upbeat on LPI Capital Bhd's prospects in its venture into Cambodia, where it recently set up CampuBank Lonpac Insurance Plc with parent Public Bank Bhd.
OSK Research said LPI offered the “greatest value and growth prospect amongst its peers, especially with its new venture into Cambodia”.
“While it is too early to quantify the earnings potential, with the success story of Public Bank group in that country, we are upbeat on the prospect of this venture.
“In fact, we expect this venture to outperform its existing Singapore operation due to intense competition in this developed and matured market,” it said in a report.
For the nine months ended Sept 30, LPI's Singapore business registered a pre-tax loss of RM2mil against a pre-tax loss of RM800,000 in the previous corresponding period.
“We understand the general insurance business in Singapore is highly competitive, hence there is much lower pricing power and therefore erosion in margin,” OSK Research said.
For the nine months ended Sept 30, LPI posted a 20% growth in revenue to RM447.5mil from RM373.1mil in the previous corresponding period.
The research house said LPI's third quarter (Q3) financial results were within expectations.
LPI reported improved Q3 net profit of RM21.52mil from RM13.4mil a year earlier owing to higher gross premiums underwritten and higher investment income received.
Although LPI's annualised net profit of RM83.4mil was 8.9% below its estimate of RM91.6mil, OSK Research said it was not overly concerned.
“This is due to seasonal effect, as the second and third quarters are usually weaker,” it said, adding that while LPI's performance in Singapore was disappointing, there was insignificant impact to its bottom line.
OSK Research maintained its “buy” call and target price of RM12.30 per share.