Ageas's H1 results beat expectations, shares jump

Investing.com -- Shares of Ageas (EBR:AGES ) jumped on Wednesday after the company reported its first-half results and announced a €200 million share buyback program. 

At 5:03 am (0903 GMT), Ageas was trading 5.8% higher at €47.06.

Ageas’s first-half results results exceeded market expectations, with a net operating result of €1.2 billion, surpassing consensus by 7% and exceeding JP Morgan’s estimates by 12%.

Europe led the way and delivered a 20% beat versus consensus with top-line growth of 35%, thanks to strong contributions from the UK and Turkey. 

The UK non-life insurance segment alone reported a remarkable 49% year-on-year growth, fueled by both rate increases and volume growth. 

In contrast, Belgium experienced a slight miss, falling 5% short of expectations due to a higher expense ratio, although capital gains provided a positive offset.

Meanwhile, Asia’s results were in line with expectations, buoyed by €41 million in capital gains and strong performance in life insurance.

Capital gains for the period totaled €75 million, aligning with consensus but 20% ahead of JP Morgan’s expectations, driven by significant gains in Asia and helping to mitigate a one-off tax issue in China. 

The solvency ratio stood at a strong 219%, exceeding consensus by 5 percentage points and JP Morgan’s estimate by 9 percentage points, primarily due to favorable model changes and robust operating capital generation.

Ageas also announced a €200 million share buyback program, set to run from September 16, 2024, to July 31, 2025. “But we believe widely expected by consensus due to the repayment of an internal loan to the Belgian subsidiary offset by investment in Taiping Pension in Asia,” said analysts at J.P. Morgan in a note. 

Despite the buyback, Ageas chose to maintain its interim dividend per share (DPS) at €1.50, which was 8% lower than expected.

Ageas has updated its full-year 2024 guidance to a net operating result of €1.2-1.25 billion, an increase from the previous guidance of more than €1.2 billion. 

The company has also revised its cash upstream target to exceed €800 million, up from €750-800 million. Ageas’s Impact24 ambition includes a cumulative holding free cash flow target of €1.7-2.1 billion and a progressive DPS with a cumulative amount of €1.5-1.8 billion, reflecting a 6-10% CAGR. The company is expected to unveil its new strategic plan at the Capital Markets Day (CMD) on September 23, 2024, which will provide further insights into its future direction.

UBS noted that while the solvency ratio has improved and guidance has been updated, the combined ratio was slightly weaker than anticipated, and earnings in Belgium were lower than expected.

JP Morgan, while acknowledging the strong first-half results and the share buyback, maintains an “underweight” rating on Ageas. 

The brokerage flags that despite the company’s attractive valuation relative to its Comprehensive Book Value, there are concerns about the low cash flow yield and the minority stakes in Asian joint ventures.

Source: Investing.com