Great Eastern Holdings Ltd. – Value Analysis (SINGAPORE:G07) : October 6, 2017

Capitalcube gives Great Eastern Holdings Ltd. a score of 79.

Our analysis is based on comparing Great Eastern Holdings Ltd. with the following peers – Singapore Reinsurance Corporation Limited, United Overseas Insurance Limited, Prudential plc and Samsung Life Insurance Co., Ltd. (S49-SG, U13-SG, K6S-SG and 032830-KR).

Fundamental Overview

Great Eastern Holdings Ltd. has a fundamental score of 79 and has a relative valuation of UNDERVALUED.

Fundamental Score

Company Overview

  • It currently trades at a Price/Book ratio of (1.74).
  • G07-SG‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • G07-SG‘s relatively high profit margins are burdened by capital inefficiency.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • G07-SG‘s return on equity currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • G07-SG‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of equity capital investment seems appropriate to support the company’s growth.
  • G07-SG has the financial and operating capacity to borrow quickly.

Drivers of Margin

  • Margins suggest relatively better discipline in both writing policies and controlling operating costs.
  • The company’s comparatively high underwriting margin (i.e. premiums earned minus insurance losses, expressed as a percentage of premiums earned) of 100% versus a peer median of 35.21% suggests that G07-SG follows either a differentiated strategy with pricing advantages and/or a disciplined strategy in writing policies versus peers. Further, G07-SG‘s pre-tax margins are above the peer median (pre-tax margin of 86.26% compared to 11.02%) suggesting relatively tight control on operating costs.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Great Eastern Holdings Ltd. engages in the provision of insurance services. It operates through the following segments: Life Assurance, General Insurance, and Shareholders. The Life Assurance segment involves in providing long term health and accident insurance to external customers. The General Insurance segment includes short term property and casualty contracts, short term medical, and personal accident general insurance contracts. The Shareholders segment consists of fund management and financial advisory business. The company was founded in 1908 and is headquartered in Singapore.