MIG_NEUTRAL_TP 21,700_Upside -13%_Potential but high valuation_BSC Company Update

Valuation  

§   BSC recommends NEUTRAL to MIG with 1-year target price at VND21,700/share, based on P/B valuation method with target P/B at 1.8x .

Forecasting business results

§   In 2022, BSC forecasts net premium revenue and NPAT to reach 2,585 bilVND (+20.2% YoY) and 256 billion VND (+14.3 % YoY), EPS FW = 1,559 VND/share, assuming: (i) primary insurance premium +21.4% yoy; (ii) the combined ratio increased to 98.3%; (iii) Portfolio size +20% yoy and return on investment increased by 30bps.

§   In 2023, BSC forecasts net premium revenue and NPAT to reach 2,978 bilVND (+15.2% YoY) and 291 billion VND (+13.7% YoY), EPS FW = 1,767 VND/share, assuming: (i)  primary insurance premium +15.2% yoy, (ii)  the combined ratio increased to 98.8%; (iii)  Portfolio size +5% yoy and return on investment increased by 50bps.

Investment perspective

§   Premium revenue grew rapidly when MIG chose an expansion strategy and was supported by MBBank's ecosystem.

§   The mix ratio increases as market share increases.

§   The insurance industry will benefit from an increase in deposit rates as short-term deposits make up the majority of financial portfolios.

§   MIG's financial investment profit increased with the increase in the size of the portfolio and the proportion of bonds.

§   Valuation (P/B fwd = 2.3x) is higher than industry average (P/B fwd = 1.6x).

Catalyst

§   Issued to strategic partners, helping to increase business valuation .

Risk   

§   Post-pandemic economic activity increases the rate of insurance claims;

§   The level of competition increases other costs in insurance activities.

Business Update

§   Primary insurance premium in Q1/2022 increased strongly, +40% yoy; The combined ratio decreased from 98.0% in Q4/2021 to 96.8%, helping to increase income from insurance business activities.

§   Financial profit +23.4% yoy.