Top Story : Kurnia Asia – Business strategy still on track ♦ Regardless of the outcome of the new motor insurance scheme proposed by BNM, Kurnia is on track to improve its profitability through various measures.
♦ For 1HFY09, third party gross premium dropped by 64.9% while third party policies fell to 276k from 848k previously, suggesting Kurnia is on track with its strategy to more selective in underwriting third party liability policies. Similarly, management expense ratio fell to 17.9% from 20.5% in the same period, as the company moves towards its target management expense ratio of 15%.
♦ Management indicated that Kurnia has surpassed the 130% minimum Capital Adequacy Ratio (CAR) set by BNM. Kurnia aims to further strengthen its CAR to a target of 150%. We believe it is achievable by the end of FY10 through the retention of earnings.
♦ We are maintaining our earnings forecasts, pending the announcement of 1Q numbers on 11 May.
♦ Maintain Market Perform with an unchanged fair value of RM0.74. Assuming the company meets our fullyear forecast, there appears to be upside to its share price.
RHB Equity 360° - 10 May 2010 (Kurnia Asia, Insurance, CSC Steel; Technical: Supermax, MPHB)
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