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.
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