PETALING JAYA: LPI Capital Bhd
is expected to see steady earnings ahead, although near-term performance is being weighed down by higher claims and softer investment income.
The general insurer posted a stronger net profit for the second quarter ended June 30, 2025 (2Q25) at RM83.17mil or a basic earnings per share of 20.88 sen.
This was up from RM78mil or 19.58 sen in the same quarter of the previous year.
Its revenue had also increased from RM469.4mil to RM507.64mil.
This brought the first half of FY25 (1H25) net profit to RM181.15mil, up from RM179.29mil in the same period of FY24.
Revenue also increased during the period to RM1.02bil from RM939.16mil previously.
CIMB Research said the weaker quarterly showing was mainly due to a 103% quarter-on-quarter increase in incurred claims, largely from a one-off RM64mil provision related to the Public Bank-National Feedlot Corp case.
It noted that investment returns also softened during the quarter.
“We have cut our FY25 earnings forecast by 13% to incorporate the one-off claim while leaving our FY26 to FY27 earnings forecasts unchanged,” it said.
CIMB Research maintained a “hold” rating on the stock with a target price (TP) of RM14.37, citing cautious premium growth prospects amid economic uncertainty.
Kenanga Research said LPI’s 1H25 results were within expectations, meeting 49% of its full-year forecast and 47% of consensus estimates.
It observed that earnings would have improved 14% on a sequential basis if dividend income were excluded, in line with stronger fire insurance contributions.
The research house added that synergies with Public Bank Bhd would take longer to materialise, but “based on yesterday’s closing and an intended payout of 70%, this translates to potential special dividends of RM1.72 per share or a yield of 12%”.
Kenanga Research kept its “outperform” rating with a TP of RM16.
MBSB Research similarly maintained a positive stance, saying LPI delivered a “decent set of earnings, as forecast,” with 1H25 core net profit of RM181mil meeting 47% of its full-year forecast.
It added that the prospect of special dividends remains the most exciting aspect of LPI, as its fundamental outlook seems unremarkable for now.
MBSB Research also highlighted that valuations are inexpensive, with LPI trading at a forward FY26 price-to-book value of 2.31 times and a 6% dividend yield.
It maintained a “buy” call with a revised TP of RM15.70.
