Affin Hwang maintains buy on LPI with TP of RM18.90

KUALA LUMPUR: Affin Hwang Capital Research expects LPI Capital Bhd's 4Q18 to repeat the performance of the recent quarter as management exercises more caution in motor risk-underwriting as well as rolls out more comprehensive fire insurance products.

LPI Capital Bhd experienced a strong rebound in 3Q18 on a quarter-on-quarter basis with a 40% increase in net profit to RM91.8mil.

The research house said that for the first nine months of 2018, LPI's net profit of RM230mil was marginally lower year-on-year due to higher claims and weaker margins.

However, these results were within its expectations, accounting for 71% of its FY18E estimate of RM322.2mil.

Affin Hwang noted that the fire segment contributed 43% of 9M18's net earned premium while the motor segment contriuted 31% and MAT, 2.1%. The fire segment accounted for about 65% of 9M18 underwriting surplus. 

The research house maintained its buy call and target price of RM18.90.