Published: Friday May 30, 2008
A welcome recovery in 2007 followed through into a strong operational first quarter performance for Caribbean insurance giant Guardian Holdings Limited (GHL). For the first quarter ended March 31, 2008, the Group recorded an earnings per share diluted of TT$0.24, compared to a loss per share of TT$0.99 at the end of the first quarter (1Q) of 2007. Excluding fair value losses, GHL's earnings growth was up approximately 30 per cent from TT$0.26 to TT$0.34.
The chairman, Arthur Lok Jack, commented that all operating divisions in the various geographic regions produced positive returns during the first quarter.
The core revenue source, Net insurance premium Revenue grew by three per cent from TT$1 billion to TT$1.1 billion. With the exception of 'other Revenue', all other revenue, streams experienced meaningful growth, which led to a 3.9 per cent boost in Total Revenue from TT$1.3 billion to TT$1.4 billion.
A 0.7 per cent growth in Net insurance benefits & claims, and a 0.9 per cent reduction in expenses, led to a 66.5 per cent boost in operating profit before fair value losses to TT$122.4 million.
A modest resurgence in the local and regional equity markets during the first three months of 2008 translated into an encouraging improvement in the group's equity portfolio.
However, the gains experienced as a result of local equities were adversely affected by the declining market value of the group's holdings of international equities and Jamaican Government Bonds. As a result Fair Value losses were down TT$15.7 million, although still a significant improvement when compared to the TT$251.1 million loss in the first quarter of 2007.
After factoring in the increase in investments in associated companies, and finance charges, the Group closed the first quarter with a net profit of $50.6 million from a net loss of TT$205.2 million in the comparable period of 2007.
Gains from the sale of its holding of RBTT shares along with the Grupo Mundial of Panama investment should translate into a one-time gain of TT$2.24 per share.
It is anticipated that the cash injection of TT$2 billion from the RBTT deal will be used to reduce some of the group's debt burden and by extent finance charges. The majority of the cash however, may be used for further acquisitions or for investment in any viable investment opportunities that may arise.
At the current price of TT$30.75, this stock is trading at an attractive forward P/E multiple of 12.8 times. In considering the group's operational recovery which started at the end of 2007, and the opportunities arising for GHL out of the completion of the RBTT/RBC deal, BOURSE maintains a BUY recommendation on this stock.
Source: Jamaica Observer