ALLIANZ – Fundamental Analysis (31 Aug 2014)

ALLIANZ Analysis:-

Excel –

My View:-

– Fair Value/Market Timing
  – 5Y DCF:
    – 28.67 – 32.82 (MOS: 55% – 61%)
  – Absolute EY%:
    – Trailing:   
      – FY13 (EPS: 1.492) – Buy below 8.95, fair value 10.9 (MOS: -18.4%)
      – R4Q (EPS: 1.634) – Buy below 9.79, fair value 11.93 (MOS: -8.1%)
    – Forward:   
      – FY14 (EPS: 1.701) – Buy below 10.2, fair value 12.42 (MOS: -3.9%)
      – FY15 (EPS: 1.939) – Buy below 11.62, fair value 14.16 (MOS: 8.9%)
    – EPS applied to reach the current stock price (12.9): 1.767   
  – ALLIANZ is undervalued in long term.
– I think MH370 and MH17 incident will only give negative impact to ALLIANZ in short term.
  – For some people, this is a risk, but I view this as an good opportunity.
– ALLIANZ’s dividend payout is extremely low, so never expect good dividend from them. Reasons:
  – High capital or surplus retained due to nature of industry
  – Stringent regulatory requirement to protect policyholders’ interest
  – Managing stringent capital buffer to withstand adverse or unfavorable experience
– Unlike LPI (general insurance and financing on leases), ALLIANZ is heavily dependence on single segment: motor insurance; and also dependence on agent for life insurance. ALLIANZ requires high capital to grow distribution capabilities, and fund new business growth.
– Balance float of outstanding shares is very low: 4.20%.
– References:
– I will continue accumulate ALLIANZ along the way.

Latest Financial – Q2 2014 Financial Report (28 Aug 2014)

At the time of writing, I owned shares of ALLIANZ.


3 thoughts on “ALLIANZ – Fundamental Analysis (31 Aug 2014)

  1. Hi Mr. Chong,

    I think you didn’t consider the dilution due to ICPS. Any reason?
    And, I can’t find any details about the ICPS (exercise price, ratio, expiry etc). You have the details?

    Oh ya, you deactivate your FB account too?


    • Diluted EPS is a performance metric used to gauge the quality of a company’s earnings per share (EPS) if all convertible securities were exercised. It is a conservative metric because it indicates somewhat of a worst-case scenario.

      My preference is still on simple EPS because I just want to take the effective execution of convertible securities. This is just matter of personal preference.

      My facebook page is deactivated for some unknown reasons. I have escalated this case to Facebook.


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