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Title:Cathay FHC (2882 TT) Buy, TP: NT$45
Download File:2882 TT Cathay FHC note 190830--sinopac.pdf 
 
Summary:Lower TP to NT$45 (0.9x 2019F P/B); Maintain Buy: We estimate the FHCs 2019 net profit will reach NT$56.72bn (+10.2% YoY), or EPS at NT$4.25. Positives include 1) Cathay Lifes better recurrent yield vs. peers in 1H19 thanks to good entry points on overseas bonds; 2) The industry structure will improve from the FSCs intention to gradually increase the requirements for margins of policy sales starting in 2H19 for Taiwanese insurers to adopt IFRS 17. Cathay Lifes success at selling protection-oriented policies helped drive stronger-than-expected VNB growth; 3) the company is valued at 0.8x P/B, toward the lower end of its 3-year P/B of 0.8x-1.6x. We lower our TP from NT$47 (1x 2019F P/B) eyeing provision pressure on the liability front amid a low-interest environment that is gradually being priced in as domestic life insurers migrate to IFRS 17.
  
Date:2019/08/30
Author:TaiwanResearch.com
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