LPI Capital Berhad has reported strong results for the third quarter of FY24, prompting MIDF Amanah Investment Bank Bhd to maintain its BUY recommendation. The target price remains at RM14.52, based on an unchanged FY25F price-to-book value of 2.42 times.
For the first nine months of FY24, LPI Capital's core net profit reached RM303 million, exceeding both MIDF's and the market's forecasts, accounting for 88% and 85% of full-year estimates, respectively. The company achieved a remarkable 29% year-on-year increase in core net profit, with the third quarter alone showing a significant 59% quarter-on-quarter (QoQ) rise.
Gross written premium (GWP) also demonstrated solid growth, reaching RM1.429 billion for the first nine months of 2024 (9MFY24), a 7% increase compared to the previous year, while the third quarter reported GWP of RM465 million, marking an 8% quarterly growth.
The improved performance can be attributed to various factors, including a thriving general insurance segment, which posted a profit increase of 27.4% year-on-year to RM339.9 million. This growth was further supported by lower reinsurance expenses, contributing to the overall profitability.
Despite modest revenue growth of 1% year-on-year to RM1.439 billion, the investment holding segment saw a substantial rise, growing by 43% year-on-year due to increased dividend income.
LPI Capital's combined ratio for 9MFY24 stood at 71.2%, reflecting a slight uptick of 0.1% year-on-year. However, the combined ratio for the third quarter improved to 66.8%, a decrease of 6.8% from the previous quarter, indicating enhanced efficiency in underwriting and claims management.
