ALLIANZ: Robust Performance Driven by Cost Efficiencies and Market Share Gains, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank research report indicates a strong financial performance, with the company demonstrating robust net profit growth and strategic market share expansion. The positive outlook has led the bank to raise its target price and reiterate a “BUY” recommendation for the stock.
Performance Highlights
The company recorded a solid 22.4% year-on-year net profit growth for the first nine months of its fiscal year 2025 (9MFY25). This impressive performance was underpinned by effective cost-containment initiatives and strategic growth across its divisions.
In the General Division, the company further cemented its leadership in the motor segment, achieving a 10.5% YoY increase in motor business premiums and capturing 46% of the industry’s motor growth, elevating its market share to 24.2%. Beyond motor, management is actively pursuing double-digit market share in the non-motor segment, which grew 7.1% YoY, outperforming the industry’s 4.4% growth. Key focus areas include strengthening presence in fire, travel insurance (including specialised segments like data centres), and leveraging rising travel volumes.
The Life Business also saw significant improvement, with its market share rising to 11.6% in 9MFY25 from 10.4% in FY24. This was largely due to the agency channel, which contributed 58.2% of annualised new premiums. Crucially, the company effectively managed medical inflation through cost-containment initiatives, including waste reduction, abuse curbing, and disciplined cost management. A conversion campaign encouraging a switch to copayment-featured medical plans also contributed to an improved loss ratio of 83.3% in 9MFY25 for its investment-linked policies, down from 87% in FY24.
Strategic Initiatives and Outlook
Looking ahead, the company anticipates continued growth momentum into the fourth quarter of FY25. Initiatives such as the “EV Shield” are expected to drive further motor growth, alongside capturing new car sales business. The group is also intensifying its agent recruitment efforts, having added approximately 1,500 new agents, bringing the total active count to around 2,300, reinforcing its agency expansion strategy.
The investment bank noted that the company is well-positioned for sustained growth, with earnings estimates for FY25-27 being raised by 8.0-8.6%. A higher dividend payout is also anticipated for FY25, translating into an estimated dividend yield of approximately 5.5%.
Challenges and Analyst View
While the overall outlook is positive, challenges include expectations of higher fourth-quarter claims in the general division, particularly due to the monsoon season. Additionally, bancassurance activity is expected to slow due to seasonality, and the traditional agency savings business may remain challenging.
Despite these challenges, TA SECURITIES remains encouraged by the company’s solid net profit growth and strategic initiatives. The firm has reiterated its “BUY” recommendation, with a revised target price of RM0.25, reflecting a 25.0% upside potential from the last traded price of RM0.20. This valuation is derived from a Sum-of-Parts (SOP) methodology, reinforcing confidence in the company’s future performance.
