Manulife Insurance (Malaysia) Berhad was formerly known as John Hancock Life Insurance (Malaysia) Berhad. Manulife’s presence in Malaysia was a result of a large-scale global merger between Canadian-based Manulife Financial Corporation and U.S.-based John Hancock Financial Services, Inc. completed in April 2004. The merger saw the emergence of Manulife Financial Corporation, which has more than 115 years of experience in the life insurance business, as the major shareholder of the Company. The Company began operating as Manulife Insurance (Malaysia) Berhad in January 2005.
The Company in Malaysia has a colourful and illustrious history. First established in 1963 as British American Insurance Co. Ltd, the Company scored many firsts in the industry. Among them are the first insurance company to offer Home Service insurance, and the first financial institution to introduce the 25-year Mortgage Loan scheme. In August 1984, the Company was listed on the KLSE.
In 1994, the Company was renamed John Hancock Life Insurance (Malaysia) Berhad to reflect our association with then called John Hancock Mutual Life Insurance Company in Boston, USA.
Throughout the years, we have positioned ourselves as a leading provider of a wide range of products and services that are designed to meet the financial protection and savings needs of eligible individuals and organisations in Malaysia. We have also gained a reputation as one of the most progressive and financially sound life insurance companies in the country. Currently, we fulfill the needs of more than 270,000 policyholders served by a dedicated agency force of 1,500 and 212 employees. An extensive network of 6 Regional Support Centre and more than 50 agency offices is strategically located throughout Peninsular Malaysia and East Malaysia.
The wide range of products are available through the Manulife Agency force, as well as selected financial services organizations. The innovative product portfolio covers a broad range of needs, which include:
• Life Protection
• Savings
• Health & Medical
• Retirement
• Long Term Care
• Investment
• University Education Funding
Years EPS
1998 0.188
1999 0.285
2000 0.119
2001 0.147
2002 0.143
2003 0.221
2004 0.201
2005 0.199
2006 0.251
2007 0.420
10 years Average EPS Growth Rate = 16.90%
5 years Average EPS Growth Rate = 27.59%
1 year EPS Growth Rate = 67.33%
Comment: Increasing, Good
Years Dividend
1998 0.06
1999 0.17
2000 0.08
2001 0.08
2002 0.09
2003 0.15
2004 0.14
2005 0.14
2006 0.14
2007 0.15
Average Dividend Payout on EPS = 57.55%
Comment: Consider high compare to other companies in the same industries
Years Revenue (000')
1998 252914
1999 257847
2000 327657
2001 410620
2002 375344
2003 407095
2004 435313
2005 474290
2006 583884
2007 573006
10 Years Average Revenue Growth Rate = 10.15%
5 Years Average Revenue Growth Rate = 9.13%
1 Year Revenue Growth Rate = -1.86%
Comment: Decreasing
Years Equity
1998 179305
1999 200949
2000 213211
2001 241945
2002 264730
2003 298104
2004 316225
2005 338324
2006 369622
2007 432583
10 Years Average Equity Growth Rate = 10.34%
5 Years Average Equity Growth Rate = 10.39%
1 Years Equity Growht Rate = 17.03%
Comment: Increasing, Stable
Years ROE(%)
1998 37.92
1999 45.34
2000 11.25
2001 12.21
2002 10.89
2003 14.93
2004 12.81
2005 11.89
2006 13.73
2007 19.65
10 Years Average ROE = 19.06%
5 Years Average ROE = 14.6%
1 Years ROE = 19.65%
Comment: High & Strong compare to other companies in the same industry
Intrinsic Value:
1. Current EPS = 0.42
2. Estimated EPS Growth Rate in the future 10 years = 15% (less than the average EPS & ROE growth rate)
3. Estimated PE = 15
4. Minimum acceptance of return = 15%
EPS become 1.7 after 10 years
Intrinsic Value : RM1.7 x 15= RM25.5 /4 = RM 6.375
Let's take a margin of safety of 50% : RM6.375/2 = RM3.19 > RM2.87 (17/6/08)
Conclusion: Strongly Undervalue if u looking for a yearly 15% return portfolio.
Let's take another culculation for safety reason.
Net Asset per share = RM2.14 (31/12/2007)
ROA = 0.42/2.14 =19.63%
19.63% x (100% - 57.55%) = 8.33%
Years NTA expected
2008 2.16
2009 2.34
2010 2.53
2011 2.74
2012 2.97
2013 3.22
2014 3.49
2015 3.78
2016 4.1
2017 4.44
Let say the 10 years ROE in future is 15% (less than the average historical data)
Average PE = 15
Intrinsic Value = RM4.44 x 0.15 x 15 = RM9.99
Let's take a MOS of 50% = RM9.99 / 2 = RM4.995 > 2.87 (17/6/08)
Comment: Strongly Undervalued
Why i choose Manulfe rather than other insurance company in the market?
1. It focus on it's specialised sector - life insurance
2. Life insurance premium income will have less effect from the economy downturn compare to general insurance especially the car insurance, fire insurance
3. If you go through the Manulfe investment portfolio, it allocate most of its cash in the goverment bond, keep on increasing. (More safe in the economy downturn)
4. Highly efficient management team, which maintain ROE above 15% (Strong)
5. With a high NTA, RM2.14 (around 75% of it's current price, a big discount)
6. Greater return than the other competitors in the same industry.
7. Low PE around 10
8. High Dividend Payout
Investment Risk:
1. Changing government policy
2. Economy Downturn
Conclusion:
Insurance industry is a great cash cow company especially the life insurance company. This kind of industry have less capital investment & maintenance cost than other industry. In the current unstable economy, put your money in a company which can protect us from high inflation is very important. So, try to think about it.
Cheers~~
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11 comments:
I agree with you, invest in Manulife is very safe and suit for those seeking annual dividend income. However, current earning might less compared to last year due to absent of one-off income from share disposal. In addition, although manulife regain its earning momentum, premium income may face competition from banking/asset managment company which tend to offer one-stop financial product including life insurance. Furthermore, current share price (RM 2.86) also trading at upper range of last 5 year price of 1.90 - 3.60. Therefore, i think manulife upside seem limited in short term and because manulife lack of catalyst, i would suggest those interested in manulife buy at weakness or adopt dividend strategy whereby buy manulife 1-2 month before it declare F&F dividend to enjoy its dividend income (manulife has consistently proposed/ declare dividend on Mac-May
Dear hng,
Thanks for your comment. Manulife is a safe player suitable for the investor who looking for a high dividend portfolio.
I love your strategy.
hi jeff7, i think the calculation of Average EPS Growth Rate got some problem..
what u calculated are not based on the compound method, so that is not accurate.. b/c as u see, the EPS for every year are not increasing.. there are up and down, so sometime u might get higher average just b/c maybe one or two year suddenly drop and then increase crazy in the next year.
i am also facing the same problem before, i think what we should take is ((0.42/0.188)^(1/9))-1, which equal to 9.34%... :)
Dear Jeff,
I also agree on your saying. But AirAsia still a value buy as EPF keep buying his share open market. I will wait for him come down to RM0.65-+ possible. However, YTLPOWER warrant (RM0.55+-) newly listing also not bad.. I'm aiming this 2 share. As my sifu also said mega sales coming soon. so be patient on your bullet to shoot at the right stock. Politic not stable, crude oil strike and subrime crisis remain as a issue awaken investor confident. so i suggest stay a side 1st. Definately, i will jump in the right time... Take care!!
I think newly listed YTLpower-WB (RM 0.69) offer some leverage benefit against its mother share (RM 1.99). It exercise price is RM 1.25 and list for 10year. However, the number of YTL power outstanding share is just keep increasing and share buyback just isn't help as is tend to distribute as dividend in species to shareholder casuing no impact on EPS. Beside that, YTL power lack of corporate development and recent windfall tax of 30% may further dilute EPS. No doubt, YTL power is relatively safe due to consistent dividend payout and higher exposure to oversea business than local, but it have to urgently show it capability to acquire earning accretion asset as soon as possible.
Dear hng,
I do agree with your statement. I did invested in the ytlpowr-WA before, and keep an eye on this company until now. But i still have some concern on the company unstability future & future development.
Dear herbert,
1st of all thanks for your comment.
Everyone have their rules of judgement. The way we think may be different. Please bare in mind that, what i have shared in this blog is just a reference for you all. Pls do your own study before you make your decision.
Regardings this statement "is this the right time to jump into the market?" I think everyone will have different answer in thier mind. But pls bare in mind, "opportunities is for the one who are ready (experience, knowledge & bullets)".
Good Investing!
Cheers~~~
Dear hongwei,
Thanks for your input, i am using the normal average EPS Growth rate culculation (without compund) in this case. I may make an mistake on this. Thanks for your info & reminder.
Cheers~~
Hi Jeff, do u have any comment on BJCORP?? If u have research for me then is the best for me.
Dear Herbert,
Let's give me some time, will get back to you as soon as possible. (A bit busy these few weeks with my shop opening)
Thanks!
Dear herbert,
I have go through BJCorp historical financial reports & research, i stopped my research half way. I found that, from the historical data, the ROE of BJCorp is not that acceptable (for me).
Berjaya Land,
The business expansion to China may bring in good return. But for the Resort business in Malaysia, is growing slow, some of them having loss.
Cosway,
At this moment, Cosway have the biggest potential to growth in BJCorp portfolio. It's expansion into especially India, Taiwan & Vietnam market, will bring in a potential growth for it's business.
Gaming,
Gaming division is consider a cash cow for BJCorp. Gaming industry in saturation status. Now facing some new goverment policies restirction. But it is still a great money flow division.
F&B,
F&B division will face a great pressure in the coming future with the increasing of raw material price. There is a risk for this division with the quick expansion. For the Sxxxxxxxs, it is still have a loss with the quick expansion. For the F&B division, BJCorp's capital expenditure is very high to capture the market share, especially in the current market share.
Stockbroking,
With the low trading volume in the near future, it will be a big effect on the stockbroking division.
Invesment DIvision,
For investment division, it will face the same pressure from the market uncertaity.
As Conclusion:
In my opinion, BJCorp is a neutral company for me. Have to take a longer time to observe. It's ROE is not stable, due to it's huge & diversification business portfolio. Hope this above can help you further.
Cheers~~
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