Liberty Holdings business looking up, say analysts

Analysts in two investment banks have given the buy recommendation to Nairobi Securities Exchange-listed Liberty Holdings, pointing at expected better financial performance.

The Nairobi Securities Exchange electronic board. FILE PHOTO | NMG 

IN SUMMARY

  • Dyer & Blair and Genghis Capital advised clients to increase holdings in the company, noting the firm’s long-term business would boost revenue while general insurance would likely be on a rebound.
  • The analysts said the metrics such as price-to-earnings (P/E) and price-to-book (P/B) ratios were favourable relative to industry ratios.

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Analysts in two investment banks have given the buy recommendation to Nairobi Securities Exchange-listed Liberty Holdings #ticker:CFCI, pointing at expected better financial performance.

Dyer & Blair and Genghis Capital advised clients to increase holdings in the company, noting the firm’s long-term business would boost revenue while general insurance would likely be on a rebound.

The analysts said the metrics such as price-to-earnings (P/E) and price-to-book (P/B) ratios were favourable relative to industry ratios.

“On a trailing basis, Liberty is trading at P/E and P/B multiples of 8.69x and 0.95x respectively against industry average P/E and P/B multiples of 13.4x and 0.98x respectively. We issue an overweight recommendation,” Dyer and Blair said.

“We maintain our buy recommendation against our target price of Sh19.09 against the latest market price of Sh13.30,” Genghis Capital said.

Genghis noted the investment income declined due to the subdued stock market performance as seen on the NSE 20-share index that is down 12.5 per cent year to date.

“The 12.1 per cent year on year decline in 1H18 is mainly attributed to lower earnings at the NSE. We believe the company is on track to match its record financial year 2012 investment income contribution of 39.5 per cent on account of increased financial investments in 1H18 (14 per cent growth year on year) with the diversified shift to government securities,” said Genghis Capital.

Dyer and Blair also saw improved revenues for the whole year.

“We are of the view that Liberty’s long-term business will continue to boost revenue with an expected rebound from the general insurance business,” said Dyer and Blair.

The company recorded lower premium flows and increased claims on the short-term side, or general insurance, in the first half of the year but change for the better is expected,” Dyer and Blair noted. “Liberty’s short-term business in Kenya had a challenging first half attributable to reduced premiums flow and increased claims.”

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