Life assurer Prudential, which generates nearly 80 per cent of its operating profits outside the mature UK market, reported impressive growth at the half-year stage. That's down to robust demand for savings products from a growing Asian middle class, as well as from the US, where its 78m baby-boomers are facing retirement. Sure, compared to embedded value (EV), the shares aren't cheaply rated for the sector - but such growth points to more share price upside ahead.
New business sales, on an annual premium equivalent (APE) basis, rose 11 per cent overall - principally driven by Asia, where sales rose 21 per cent. Although US sales rose 7 per cent, and even Prudential's UK sales rose 1 per cent. In fact, and with the exception of China and Korea, the Asian business delivered heady sales growth across the region, and Asian operating profits soared 21 per cent in the period to £443m. Meanwhile, the US unit, mainly Jackson National Life, grew operating profit 29 per cent to £459m and the UK operation did well to keep profits flat at £552m. Asset management arm M&G's profit was flat, too, at £199m, while assets under management there edged up £1bn to £204bn.
Investec Securities expects full-year EPS of 62p (57.5p in 2011) and EV of 820p.
PRUDENTIAL (PRU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 794.5p | MARKET VALUE: | £20.3bn | |
| TOUCH: | 794.5-796p | 12-MONTH HIGH: | 820p | LOW: 495 |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 363p* | EMBEDDED VALUE: | 806p | |
| Half-year to 30 Jun | Net premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 12.9 | 1.11 | 32.7 | 7.95 |
| 2012 | 14.1 | 1.26 | 37.5 | 8.40 |
| % change | +9 | +14 | +15 | +6 |
Ex-div:22 Aug Payment:27 Sep *Includes intangible assets of £6.1bn, or 237p a share | ||||
