Bao Viet seeking some extra market insurance

Vietnam’s largest insurer Bao Viet Holdings will issue 54 million shares to its shareholders this quarter. The issuance would. raise the group’s chartered capital from $330 million to around $358 million, said Tran Trong Phuc, a member of Bao Viet Holdings’ (BVH) board of directors.

As Thang Long Securities Co’s analysts estimated, after the share issuance, BVH’s earnings-per share (EPS) in 2010 would be around 1,500-1,700 dong and its stock market price would drop by about 3-5%.

BVH’s EPS based on its earnings in the last four quarters was 1,556 dong. The stock closed at 45,000 dong at the latest trading session on the Ho Chi Minh Stock Exchange, on April 22.

As agreed by BVH’s general shareholders meeting, new shares will be offered to existing shareholders at 12,000 dong per share at a rate of 8.6%, meaning a shareholder holding 1,000 shares has the right to buy 86 shares.

“Mobilised capital is earmarked for core business investments, namely life and non-life insurance, banking, securities and fund management,” said Le Quang Binh, chair of BVH’s board.

Apart from finance projects, additional cash will be spent on upgrading information technology infrastructure to raise the group’s competitive edge and improve customer services quality.

The share issuance would help muscle-up BVH’s financial strength and raise its corporate income, said an analyst with Thang Long Securities. The analyst, however, noted that BVH’s business targets in 2010 did not show many remarkable improvements in the group’s core business.

In 2010, BVH targets $616.8 million in aggregate revenue, a 10.9 percent year-on-year growth, a pre-tax profit of $73.4 million and an after-tax profit $58.1 million, up 9.11 percent against 2009. Its return-on-equity (ROE) and dividend were 13.5 and 11%, respectively.

According to Alpha Securities Inc, if based on business index, BVH’s ROE was not as high as other companies in the same sector such as PetroVietnam Insurance (PYI) and Vietnam National Reinsurance (VNR). However, BVH’s advantage was its influence and the scale of leading, especially in the non-life insurance sector.

BVH wants to maintain its nonlife insurance market share in 2010 at 30.4%, currently followed by PYI with 20.6%, Bao Minh CMG (17.1%) and PTICO Insurance (9.7%).

Meanwhile, according to Pacific Securities’ figures Bao Viet held a 28 percent life insurance sector market stake in 2009, second to Prudential (31%) and Manulife (10%).

BVH’s total revenue in the first quarter was estimated at about $12.7 million, up 15 percent year-on-year. The pre-tax and after-tax profits were $11.5 million and $14.9 million, respectively.

Currently, only 7.8 percent of the company’s equity or 49.13 million shares are freely tradable. The rest are held by the Ministry of Finance with a 70.9 percent stake and strategic investors including HSBC Insurance with a 18 percent stake and State Capital Investment Corporation (SCIC) with a 3.26 percent holding.

BVH operates in life and non-life insurance, reinsurance, financial investment, fund management, banking and real estate among others. Its total assets as of the end of 2009 was $1.77 billion, up 33.17 percent increase against the early 2009.

Tags: Bao Viet, Vietnam insurance industry, vietnam Insurers, Vietnam life insurers