Liberty Kenya Holdings Limited announced their audited results for the period ended 31st December 2014 on 08th April 2015:
Recommendation; HOLD, Fair Value KES 23.80 (Downside -4.79%)
Sturdy Performance; Net Earned Premiums Up by 15.38% to KES 4.69Bn amid 12.52% Growth in Total Income
Escalation of total income to KES 8.03Bn was spawned by the expansion in revenues earned from premiums and investment income. Net premiums earned stood at KES 4.69Bn compared to FY13 premiums of KES 4.07Bn. Gross earned premiums grew by 8.64% to KES 8.04Bn as cessation rates declined by 3.41% to KES 3.34Bn reflecting growth in the firm’s business. Investment income shored up 12.88% to KES 2.97Bn.Unearned premiums were up by 3.89% to KES 2.76Bn.
17.16% Upswing in Total Expenses despite Sharp Decline in Claims
Claims expense dived 69.70% to KES 2.45Bn indicating strong management of claims. Despite the dip, total expenses soared to KES 3.51Bn triggered by a 10.48% surge in commissions to KES 921.30Mn as well as a 12.34% leap in net insurance benefits and claims to KES 3.46Mn. The expense ratio diminished by 3.18% to 43.67%.
Profit After Tax Growth by 3.89%; DPS of KES 0.50 Yielding 2.00%
Favourable rise in premiums was netted off by the total expenses leading to a moderate surge in PAT to KES 1.15Bn compared to FY13 PAT of KES 1.11Bn. Earnings per share remained flat at KES 2.14 (FY13- KES 2.15). The stock is trading at 11.68x earnings with a return of equity of 18.66% and P/B 2.18x against an industry average of 17.99% and 2.07x respectively. The firm also proposed a dividend of KES 0.50 that would yield 2.00%.
Outlook: Management of Liberty Kenya holdings group limited are keen to continue to focus on branding, process improvement, investment in technology and expanding of its distribution network. Their sober performance reveals a clear roadmap for steadfast growth of the firm. The proposed dividend of KES 0.50 will be payable to shareholders on a date to be published.