Hong Leong Financial Group’s (HLFG) potential sale of its 70% stake in Hong Leong Assurance (HLA) and 65% stake in Hong Leong MSIG Takaful (HLMT) is expected to unlock its valuation.The potential sale of HLA and HLMT is a positive in that it would unlock the valuations of Malaysia’s fourth largest life insurer. The disposals could raise about RM3.2bil, which translates to RM2.79 per share, which we think could potentially be distributed back to shareholders.
HLFG announces that it will commence negotiations for the possible sale of its stakes in HLA and HLMT. The buyers are not specified. HLA, which is the fourth largest life insurer in Malaysia after AIA, Great Eastern and Prudential, in terms of annualised new business premiums.
The research house said the insurance division currently contributes less than 10% of group earnings so there would not be a significant impact to earnings post disposal.
What HLFG would have left in its stable would be a 64.4% stake in HL Bank, 30% stake in MSIG Insurance, an 81.3% stake in HL Capital and a 100% stake in HL Insurance (Asia).
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