LPI Capital Bhd has received a MAINTAIN BUY call from MIDF Amanah Investment Bank Bhd (MIDF Research), setting an unchanged target price of RM14.52 following the company’s strong financial performance in 2024.
The research house noted that LPI’s earnings were buoyed by Malaysia’s economic recovery, though external risks such as geopolitical tensions and climate change could impact demand for insurance and claims frequency in 2025.
However, the firm’s prudent underwriting and superior customer service are expected to mitigate these challenges.
LPI’s position as a new member of the Public Bank Bhd (PBB) corporate family is also seen as a strategic advantage, with analysts highlighting opportunities for cross-selling insurance products to PBB’s customer base and the potential development of tailored insurance offerings. The company is also planning further automation of processes and expansion of distribution channels to enhance growth.
For the financial year ended 2024 (FY24), profit after tax (PAT) surged by 20% year-on-year (YoY) despite flat insurance revenue. The growth was driven by an 18% increase in profit from the general insurance segment, reaching RM438.1 million, supported by a higher insurance service result and lower reinsurance expenses.
However, LPI’s fourth-quarter (4Q) of FY24 core net profit declined by 40% quarter-on-quarter (q-o-q) to RM74 million, despite slightly higher revenue. The weaker quarterly performance was attributed to higher reinsurance expenses and lower investment returns, though analysts pointed out that the 3Q is typically the strongest period of the year.
Overall revenue for LPI grew by 1.1% YoY to RM1.93 billion, with 97.7% coming from the general insurance segment and the remainder from investment holdings. Revenue from investment holdings saw a notable 42.4% YoY increase, driven by higher dividend income, while general insurance revenue saw a modest 0.4% YoY increase due to higher interest and dividend income.
LPI’s gross written premium (GWP) for FY24 increased by 7% YoY to RM1.86 billion, although 4QFY24’s GWP of RM431 million fell 7%QoQ, which analysts attributed to seasonal factors, as the final quarter is typically the weakest. The company’s combined ratio improved by 4.7 percentage points YoY to 72.2%, reflecting lower claims.
Given the stable performance and positive growth outlook, MIDF Research left its earnings forecasts unchanged, reinforcing confidence in LPI’s ability to navigate market uncertainties while leveraging its expanded corporate network.
