Allianz Malaysia Bhd (AMB) is one of the leading listed insurance companies on Bursa Malaysia. As of 1 May 2019, AMB’s market capitalisation is RM 4.7 billion and is calculated based on a combination of ordinary & preference shares as of 31 December 2018. In this article, I’ll be covering on its latest financial results & valuation figures.

Thus, here are 11 key things to know about AMB before you invest:

  • Gross Written Premium (GWP)
    AMB has achieved a CAGR of 8.75% in GWP, up from RM 2.33 billion in 2010 to RM 4.55 billion in 2018. This is largely contributed by premium increment from both life and general insurance segments over the past 8 years.  

Source: AMB’s Annual Reports

  • Investment Assets
    AMB’s Investment Assets have accounted for 81.9% of its total assets in 2018. Thus, it is also a key source of income to AMB apart from GWP.

    AMB has achieved a CAGR of 15.1% in investment assets, rising from as much as RM 4.63 billion in 2010 to RM 14.25 billion in 2018. Here, I will
    provide a breakdown of its investment assets as of 31 December 2018:


No.

Type of Investments
Amount 2018(RM Million)Amount 2018 (%)

1
Government & Government-related bonds
6,972.06

48.9
2Unquoted Bonds of Corporations4,797.7233.6

3
Quoted Equities Securities & Unit Trust
1,462.38

10.3
4Loans281.932.0
5Cash332.002.3
6Others408.312.9
AMB’s Total Investments14,249.40100.0


Source: AMB’s Annual Reports

  • Investment Income
    AMB has achieved a CAGR of 16.7% in investment income. It increased from RM 184.2 million in 2010 to RM 634.9 million in 2018. AMB’s rise in investment income is on par with its growth in investment assets for the last 8 years.

Source: AMB’s Annual Reports

  • Operating Revenue
    As a result, AMB has achieved a CAGR of 9.49% in operating revenue. It had grown from RM 2.51 billion in 2010 to RM 5.18 billion in 2018. This is contributed by continuous increment in GWP and investment income achieved by AMB during the 8-year period.


Source: AMB’s Annual Reports

  • Shareholders’ Earnings
    AMB has achieved a CAGR of 14.3% in shareholders’ earnings, growing from RM 129.2 million in 2010 to RM 377.0 million in 2018.

    Here, I use AMB’s diluted earnings per share (EPS) instead of basic EPS. It considers an adjustment for the effects of all conversion of its ICPS as of 31 December 2018. I would use diluted EPS to calculate P/E Ratio for AMB (Point 9).

    AMB has increased its diluted EPS from 37.3 sen in 2010 to 109.1 sen in 2018. AMB has a 9-year Return on Equity (ROE) average of 10.97%. This means, it had made, on average, RM 10.97 in annual earnings from RM 100.00 in shareholders’ equity from 2010 to 2018.


Source: AMB’s Annual Reports

  • Cash Balance
    AMB has increased its cash & cash equivalent from RM 494.8 million in 2010 to RM 1.24 billion in 2018.

Source: AMB’s Annual Reports

  • Balance Sheet Strength
    AMB has maintained a stable gearing ratio where its total liabilities had accounted for around 80% of its total assets for the last 9 years.

    In Malaysia, Bank Negara Malaysia (BNM) requires insurers to maintain a minimum Capital Adequacy Ratio (CAR) of 130%. This is important for a high CAR enables insurers to absorb any unexpected losses if occured in the future. AMB has revealed that both its life and general insurance companies had exceeded 130% in CAR as of 31 December 2018.


  • Who Owns AMB?
    As of 20 March 2019, the five largest shareholders and their amount of direct ordinary shareholdings in AMB are as followed:


No.Ordinary ShareholdersShareholdings (%)
1Allianz SE65.26%
2Employees Provident Fund Board4.40%
3Pertubuhan Keselamatan Sosial3.44%
4Kumpulan Wang Persaraan (Diperbadankan)3.59%
5Public SmallCap Fund2.04%
6Others21.27%
Total Shareholdings100.00%



Meanwhile, its five largest preference shareholders and the amount of preference shareholdings in AMB are as followed:

No.Ordinary ShareholdersShareholdings (%)
1Allianz SE85.11%
2Public Regular Savings Fund3.32%
3Pertubuhan Keselamatan Sosial2.68%
4Employees Provident Fund Board2.04%
5Public SmallCap Fund1.64%
6Others5.21%
Total Shareholdings100.00%

Source: AMB’s Annual Report 2018

  • P/E Ratio
    As of 1 May 2019, AMB is trading at RM 13.60 a share. In 2018, AMB’s diluted EPS is RM 1.091. Thus, its current P/E Ratio is 12.47, below the insurer’s 9-year P/E Ratio average of 13.35.


  • P/B Ratio
    In 2018, AMB has diluted net assets of RM 9.73 a share. It is calculated based on a combination of ordinary & preference shares. Thus, it has a current P/B Ratio of 1.40, slightly below its 9-year average of 1.46.


  • Dividend Yields
    Prior to 2018, AMB pays out negligible amount of dividends. As such, I would not calculate its 9-year average as it is not meaningful.

    In 2018, AMB has paid out RM 0.40 in dividends per share (DPS). Thus, its dividend yield is 2.94% per annum.


VIA’s Verdict

Overall, AMB has delivered sustainable growth in GWP, investment income, and shareholders’ earnings to its shareholders for the last 9 years. This has caused a sustainable growth in its share price, thus, lifting market capitalisation from RM 1.87 billion in 2010 to RM 4.70 billion presently.

Source: Google Finance

At present valuation, AMB is trading at below average in terms of P/E & P/B and has substantially increased its dividend payouts in 2018.

So, is this a good time to invest AMB at RM 13.60 a share today?

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