INVESTMENT THESIS

• Agribank Insurance (ABIC hereinafter) is the pioneer in the secured credit insurance provider in Vietnam market.
• ABIC owns well dispersed risk business model according to the large sample rule, making its remarkable profitability. The company records impressive low compensation fee rate (around 22% of net premium). That in line with well advantage from parent company-Agribank helps it rapidly expand market, maintaining steady premium growth as well as sector-lowest combined ratio. As the results, ROE of ABIC is at sector-highest level, two-folded ROE of peers.
• There is still potential room for the Company to improve its margin, underpinned by recovered interest rate base expectation and from diversified investment portfolio.

INVESTMENT RISKS
• The premium growth mostly depends on credit growth of Agribank that has temporary suffered from Covid in 2 latest years. In addition, the investment portfolio only focusing on short-term deposit also exposed to declining interest rate.

RECOMMENDATION

The advantage from the parent bank helps to reinforce ABIC’s premium revenue growth and outstanding profitability.

Compared to peers, ABI is trading at a much lower P/E at 7.7x than the 14.x sector average.

GTJAS recommend “BUY” ABI with a target price of 80,000VND/share for long-term investment horizon (1y), corresponding to the expected return of 25%.