Jun 2007 Financial News

SFC Releases First Quarter Results

Jun 01, 2007

Results for the First Quarter Ended March 31, 2007
All figures quoted in Barbados Dollars unless otherwise stated

For the First Quarter Ended March 31, 2007, Sagicor Financial Corporation (SFC) reported Earnings Per Share (EPS) of 7.4 cents compared to 7.1 cents reported for the same period in FY06. This represented a minimal increase of 4.23 per cent.

Net Premium Revenue for the first three months of FY07 was $193.279 million, up 7.79 per cent or $13.961 million on the corresponding period of the prior financial year. Net Investment Income rose 13.21 per cent or $16.219 million to $139.021 million. Thus, Total Revenue amounted to $332.300 million, an increase of 9.99 per cent or $30.180 million.

Total Benefits and Expenses also increased, up 8.84 per cent or $23.915 million from $270.483 million in Q106 to $294.398 million in Q107. For the period under review, Benefits totaled $182.923 million while Expenses amounted to $111.475 million. As noted by the Chairman, included in Expenses for 2007 was an additional $3.9 million in finance costs, arising from additional debt of $147.1 million on the balance sheet at March 31, 2007 compared to one year previously.

Q107 on Q106, Income from Ordinary Activities was up a substantial 19.80 per cent of $6.265 million from $31.637 million to $37.902 million. The Effective Tax Rate was 14.97 per cent for the quarter compared to a Tax Rate of 16.85 per cent in the comparable quarter of FY06. As such, Net Income grew an outstanding 22.51 per cent or $5.922 million from $26.305 million (Q106) to $32.227 million (Q107).

For the three month period, Net Income Attributable to Shareholders was up a minimal 4.90 per cent or $0.924 million to $19.791 million. Net Income Attributable to Participating Policy Holders was $2.689 million, a significant increase of 422.14 per cent or $2.174 million. Net Income Attributable to Minority Interests stood at $9.747 million, up a considerable 40.79 per cent or $2.824 million on the quarter of the previous fiscal year.

Currently SFC is trading at a price of TT$13.50 on the local market and at our current forecasted EPS of TT$1.75, this share is trading at a price to earnings multiple of 7.71 times. Additionally using a multiple of 10 times and the forecasted EPS of TT$1.75, this share has an expected return of approximately 30 per cent on the current price or a target price of $17.50. Thus, based on this analysis we continue to recommend a BUY on this share.

Nancy Chen
WISE Equity Research Team