Friday, April 15, 2011

Allianz extends gains

KUALA LUMPUR: ALLIANZ MALAYSIA BHD [] extended its gains on Friday, April 15 and was up 3.08% or 16 sen to RM5.36 at 10.50am with 162,900 shares traded.

The stock began its sharp ascend a day earlier after CIMB Equities Research said Allianz Malaysia offered the only exposure to a well-managed Malaysian composite insurer that is controlled by an established international insurance group.

The research house said on Thursday, April 14 that Allianz's key attractions were (1) its well-managed general insurance business with above-industry underwriting margin, and (2) the expected exponential expansion of life insurance contributions.

CIMB Research said Allianz was also set to ride on the upward adjustment of motor tariffs starting next year.

'Assuming a 40-50% discount to the P/E implied in our target price for AIA, we arrive at a target P/E range of 8-9.6 times, which implies a value of RM8.20-9.80 for Allianz or upside of 64-97%.

'Despite its strong fundamentals and bright outlook, the stock is trading at only 6x P/E and 1.2x P/BV. Its only drawback is its low liquidity due to lack of newsflow and coverage by analysts,' it said.

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