Protector preview Q4 2023
Target price 280 (Increase from 264 pre Q3) - Buy
All eyes on 2024 after a great 2023 with 40% growth💪
Our expectation for Q4 is 26,9% growth, a Combined Ratio at 91,6% and a strong investment result sized 752 MNOK which leads to Q4 eps 5,2 NOK.
This means 40% growth (32% in LCY), A Combined Ratio of 89,6% and a ROI sized 1207 MNOK in 2023. This leads to 2 questions:
1 – how is it possible to grow 40% (32% in LCY) after 20% CAGR growth last 10 years?🤔 It’s doable if you are “Cost leader in the world”💰 (with a cost ratio less than half of competitors (apple to apple) and “quality leader”🥇 at the same time (it’s a fact and well documented) and you have a “hard market” (everybody chasing higher prices and increased profitability meaning less competition for Protector as a cost leader in the market)
2 – why is such a fast-growing company priced a lot lower than a median Nordic peer?
You tell me. 🤷♂️
2024; another great year with limited risk and a lot of visibility
Our estimate for 2024 is 18,1% growth, combined ratio sized 88,9% and ROI 6,2% which leads to a PTP 1919 MNOK and an EPS sized 18,4🍾
We have increased our target price to 280 (from 264) on the back of slightly increased growth expectations, equity return up from 8% to 10% (conservative relative to last 10 years performance vs all benchmarks) and slightly reduced estimate for future bond return.
On January 22nd we will receive the important update on January 1st renewal date which still is a very significant renewal date in Protector. Our expectation is a very strong renewal rate higher than 100% and an accumulated LCY growth sized 14,3% in the Nordics January 1st.
Let’s meet again after Q4 is delivered and go deeper into our and other analysts view on the company. One year ago, we said 200 per share, now we have increased target price to 280🚀
Disclaimer: Hvaler Invest is a significant shareholder so you cannot trust us (or perhaps you can?)
Lillestrøm, January 19th 2024
Sverre Bjerkeli David Bjerkeli
Analyst trainee Senior Analyst
Hvaler Invest AS Hvaler Invest AS