Old Mutual Limited: Stronger (early) signs for the bank

研报英文原文证据摘录

Old Mutual Limited: Stronger (early) signs for the bank

Cons.

reduced forecasts for the reported group metrics (we forecast H1 26 Adj Headline 12/26E 1.92 1.81 -6 1.83

Earnings to decline -c19% and -c8.4% for FY26E). Excluding Malawi, we forecast H1 12/27E 2.20 2.16 -2 2.07

26E and FY26E RFO to show growth of -1.5% and +c10%, while AHE is expected to 12/28E 2.45 2.42 -1 2.39

decline -c5% and -c2% respectively. On a per share basis, these reductions are offset

somewhat due to the impact of the share buyback. Michael Christelis, FIA CFA

Analyst

michael.christelis@ubs.com

Remains top insurance pick with most upside (>40%) and increasing conviction +27-11-322 7320

We retain our Buy rating on Old Mutual and R19.20 price target, supported by four key

factors: 1) an attractive valuation relative to its historical GEV multiple (despite stronger

embedded value assumptions and a robust Q1 update); 2) the completion of the R3

billion share buyback (adding c4% to per-share metrics) with further buybacks likely as

capital optimisation continues; 3) operating earnings momentum driven by declining

banking losses and the delivery of the group’s R2.5 billion cost-saving programme; and

4) a sustained improvement in ROE and RoGEV over the medium term.

Valuation: Retain Buy rating, SOTP-based price target of R19.2/sh

We reduce our FY26E AHE per share forecasts c6% largely due to marking to market for

the weaker equity markets (esp. Malawi) offset somewhat by the completion of the

share buyback. We retain our Buy rating and SOTP-based price target for the group.

OMU trades at c0.6x GEV (c1x P/BV) with the valuation supported by the c8% yield and

sustainable ROGEV of c15% and ROE expansion towards c17% in the medium term.

Highlights (R) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E