Stock Name: KURASIA
Company Name: KURNIA ASIA BHD
Research House: OSK
Company Name: KURNIA ASIA BHD
Research House: OSK
The earnings of Malaysia's largest general insurance firm, Kurnia Asia Bhd, is set to jump to RM42.7 million in 2011 and RM61 million in 2012 on a better outlook for the sector, OSK Research said.
A lower claims ratio and stable investment income is expected to be reflected in Kurnia's first quarter results for 2011, to be announced tomorrow.
The firm is also expected to benefit from the motor premium hike which will take place from 2012 to 2015, said OSK in its research report today.
"Thus, we are upgrading our 2011 earnings outlook for Kurnia to RM42.7 million, up by 14.8 per cent from RM37.2 million previously, and the 2012 earnings to RM61 million, up by 33.8 per cent, from an earlier estimated RM45.6 million," it added.
OSK said its sensitive analysis showed that every 10 per cent increase in gross premium will bump up 2012's net profit by 0.6 per cent.
For 2011, it said, the gross premium will likely record a high single digit to low double digit growth,coming mainly from the non-motor segment in accordance with Kurnia's strategy to grow its more lucrative non-motor business.
Kurnia's management is aiming for a 30 per cent contribution from the non-motor to the gross premium portfolio in medium term as compared with 19 per cent in 2010, said OSK.
It also said the claims ratio is expected to normalise and hover around the 70 per cent level as compared with 76 per cent in 2010, after clearing up some of the old bodily injury claims filed last year.
"We expect management expenses to improve as well, due to better cost management practice. Investment income will likely remain stable with an annualised investment yield of between 5.5-6.6 per cent," it added.
OSK has put a fair value for Kurnia Asia's share price at 42 sen based on an industry average of 15 times price earning ratio. -- Bernama
A lower claims ratio and stable investment income is expected to be reflected in Kurnia's first quarter results for 2011, to be announced tomorrow.
The firm is also expected to benefit from the motor premium hike which will take place from 2012 to 2015, said OSK in its research report today.
"Thus, we are upgrading our 2011 earnings outlook for Kurnia to RM42.7 million, up by 14.8 per cent from RM37.2 million previously, and the 2012 earnings to RM61 million, up by 33.8 per cent, from an earlier estimated RM45.6 million," it added.
OSK said its sensitive analysis showed that every 10 per cent increase in gross premium will bump up 2012's net profit by 0.6 per cent.
For 2011, it said, the gross premium will likely record a high single digit to low double digit growth,coming mainly from the non-motor segment in accordance with Kurnia's strategy to grow its more lucrative non-motor business.
Kurnia's management is aiming for a 30 per cent contribution from the non-motor to the gross premium portfolio in medium term as compared with 19 per cent in 2010, said OSK.
It also said the claims ratio is expected to normalise and hover around the 70 per cent level as compared with 76 per cent in 2010, after clearing up some of the old bodily injury claims filed last year.
"We expect management expenses to improve as well, due to better cost management practice. Investment income will likely remain stable with an annualised investment yield of between 5.5-6.6 per cent," it added.
OSK has put a fair value for Kurnia Asia's share price at 42 sen based on an industry average of 15 times price earning ratio. -- Bernama
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