ALLIANZ – Fundamental Analysis (5 Dec 2014)

ALLIANZ Analysis:-

Excel – http://1drv.ms/12FqjBC

My View:-

– Valuation
  – Absolute EY%:
    – Trailing:
      – FY13 (EPS: 1.492) – Fair value 11.12 (Fair Value Uncertainty: VERY HIGH)
      – R4Q (EPS: 1.651) – Fair value 12.3 (Fair Value Uncertainty: HIGH)
    – Forward:
      – FY14 (EPS: 1.643) – Fair value 12.24 (Fair Value Uncertainty: HIGH)
      – FY15 (EPS: 1.873) – Fair value 13.95 (Fair Value Uncertainty: MEDIUM)
    – EPS applied to reach the current stock price (11.9): 1.598
– 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:
  – http://klse.i3investor.com/blogs/rhb/64751.jsp
– I will continue to hold ALLIANZ.

Latest Financial – Q3 2014 Financial Report (21 Nov 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1801029

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

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