Broker Kingdom Securities termed CIC’s share a “buy” noting its general business had also turned to profit from a loss in the same quarter last year.
The brokerage said CIC Group was likely to see a nearly 46 per cent increase in share price within the next 12 months based not only on the earnings, but favourable multiples relative to other listed companies in the sector.
The prospects for listed CIC Insurance Group’s #ticker:CIC share have improved after it increased first quarter profit five-fold and projected a lower motor claims costs for this year.
Broker Kingdom Securities termed the insurance company’s share a “buy” noting its general business had also turned to profit from a loss in the same quarter last year.
Medical insurance also turned from loss to profit in the quarter while the motor business cut losses by nearly a half, pushing the group’s first quarter profit before tax to Sh311 million compared to Sh57 million in the same quarter last year.
Kingdom Securities, which along with CIC are partly owned by Cooperative Bank #ticker:COOP, did not reveal the exact net profit. Coop Bank has a 35.71 per cent shareholding in Cooperative Insurance Society, which in turn had a 74.3 per cent stake in CIC Group as at the end of 2017.
The brokerage said CIC Group was likely to see a nearly 46 per cent increase in share price within the next 12 months based not only on the earnings, but favourable multiples relative to other listed companies in the sector.
“We recommend a BUY for CIC Group; at its current average price of Sh4.60 on a target price of Sh6.70 for an expected return of 45.65 per cent within a duration of a year from now. This is based on its elevated earnings multiples when compared to the rest of the listed companies in the sector, this taken from its recent full year results for 2017,” said Kingdom Securities.
“A further look at its first quarter results for 2018 showing an expected positive financial performance pegged (to) anticipated lower motor claims costs thanks to motor assessment centres, planned increased scale in CIC medical and continued diversification journey in the ordinary life and pension schemes,” it added.
Kingdom Securities noted that the earnings multiples indicated that investors are anticipating higher earnings.
“CIC Group has a high price-to-earnings (P/E) ratio of 25.28x and a price-to-book (P/B) ratio of 1.56x with sector P/E and P/B at 17.91x and 1.17x respectively, suggesting that investors are anticipating higher earnings growth in the future as likened to the overall market and with this projected to have an upward drive on the share price in the long run,” the analysts said.
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