Inside the office of Post and Telecommunications Insurance Corp (HNX: PTI).(Photo: VNA) Hanoi (VNS/VNA) - Most insurance stocks have underperformed despite a positiveoutlook for the Vietnamese insurance sector.
Ten insurancecompanies are trading on the Vietnamese stock market but only Bao Viet (HoSE:BVH) has seen its share price approach 80,000 VND, as its shares ended August 5at 78,600 VND per share.
Meanwhile, anothernine stocks closed August 5 at maximum 36,500 VND per share – almost half of BaoViet’s share price.
It is obviousinsurance stocks are undervalued on the market despite their gains in earnings,local media reported.
In the first sixmonths of 2019, Bao Viet recorded its combined revenue was up slightly from theprevious year to 20.9 trillion VND.
With a six-monthpost-tax profit of 670 billion VND, the company also fulfilled 54.6 percent ofits post-tax profit for the year.
Other insurancebusinesses such as Post and Telecommunications Insurance JSC (HNX: PTI), BIDVInsurance Corp (HoSE: BIC), Agribank Insurance (UPCoM: ABI) and MilitaryInsurance Corp (UCPoM: MIG) also performed well in the first six months buttheir shares are not too expensive at the moment.
Another leadinginsurer – Bao Minh Insurance Corp (HoSE: BMI) – on June 21 paid a 12 percentdividend in cash to investors for 2018’s results. The company has not revealedits results in the first six months, but early forecasts point out the companywill release good figures.
According to theInsurance Association of Vietnam (IAV), the domestic insurance market wasstrong in the first six months of the year.
Total revenue ofinsurance fees in six months increased 16 percent year on year to 69.4 trillionVND. Of the figure, revenue of life insurance was up 17 percent year on year to44.2 trillion VND and non-life insurance rose 14 percent to 25.2 trillion VND.
IAV figures meaninsurance companies saw good earnings in the first six months. Therefore, thereis plenty of room for insurance firms to improve earnings in the future,especially as Vietnamese people are paying more attention to insurance deals inorder to prepare for risks.
However, insurancestocks may not be attractive to individual investors because of their modestdividend payout rates.
In recent years,insurance firms have been paying dividend payout rates of 10-15 percent eachyear.
Bao Viet plans to paya 10 percent dividend to investors between July and September for last year’sresults. The amount of the dividend payout is estimated at 700 billion VND.
Its dividend payoutrate has remained the same over the last few years.
However, the firm’sshare trading liquidity is only 220,000 shares in each session, which is modestcompared to other large-cap stocks.
A similar trading situationalso happened to other insurance stocks as their liquidity is quite low.
But to institutionalinvestors, insurance stocks do have value.
The buying ininsurance stocks of institutional investors, especially foreign companies, willhelp local firms access international practices and standards to makeimpressive growth rates in the local market.
Recent deals arebetween the Canada-based FairFax and BIDV Insurance Corp, between Post andTelecommunications Insurance Corp and DB Insurance.-VNS/VNA
VNA
