Nov 2007 Financial News

GHL Releases Nine Months Results

Nov 15, 2007

Guardian Holdings Limited (GHL)
Results for the Nine Months Ended September 30, 2007

For the Nine Months (NM) Ended September 30, 2007, Guardian Holdings Limited (GHL) reported an Operating Profit (before fair value losses) of $259.92 million compared to an Operating Loss (before fair value losses) of $41.55 million for NM06. This represented an increase of $301.47 million in profits. For the third quarter of fiscal 2007, the Group reported an Operating Profit (before fair value gains) of $92.37 million, an improvement of $112.03 million on the comparable period in FY06.

The Chairman stated that the Group’s operating companies performed well and produced increased revenues. Life Net Premium Income increased by 20 per cent, Health Premium grew by 9 per cent and Property & Casualty Net Premiums increased by 28 per cent over the corresponding period in 2006.

Insurance Premium Revenue for the period under review was $3.71 billion, an increase of 13.53 per cent or $441.98 million on the same period in fiscal 2006. Q307 on Q306, this figure was up a healthy 19.06 per cent. Insurance Premium ceded to Re-insurers totaled $575.28 million for NM07, down 22.21 per cent on the same figure for NM06. Thus, Net Insurance Premium Revenue for the Nine Month period stood at $3.13 billion, up a noteworthy 23.99 per cent or $606.21 million on the corresponding period in the last financial year.

Investment Income for NM07 amounted to $581.33 million, an increase of $80.13 million or 15.9 per cent on NM06. Q307 on Q306, this figure was up 14.15 per cent. Fees and Commission was up a considerable 47.22 per cent, from $63.14 million (NM06) to $92.96 million (NM07). However, Q307 on Q306, this figure was down a substantial 33.97 per cent from $45.57 million to $30.09 million. Other Revenue ended the Nine Months at $200.77 million, up an outstanding 62.72 per cent on the same figure in FY06, while Q307 on Q306, the figure was up by an even larger margin of 326.25 per cent or $66.22 million. Thus, Total Revenue ended NM07 at $4.01 billion, up a healthy 24.69 per cent or $793.55 million on NM06.

Net Insurance Benefits and Claims amounted to $2.45 billion, an increase of 27.76 per cent or $532.93 million on the same figure for NM06. For Q307 this figure was $873.58 million, up 24.74 per cent or $173.27 million on Q306. NM07 on NM06, Expenses fell by 3.06 per cent from $1.34 billion to $1.30 billion. Thus, as mentioned above, Operating Profit (before fair value losses) amounted to $259.92 million.

Fair Value Losses for the Nine Month period under review was $182.97 million compared to Fair Value Losses of $586.02 million in the corresponding period of fiscal 2006. However for Q307, GHL had a Fair Value Gain of $66.77 million compared to a Fair Value Loss of $98.88 million for Q306. Thus, Operating Profit for NM07 was $76.95 million compared to an Operating Loss of $627.56 million for NM06. While Q307 saw an Operating Profit of $159.14 million.

Share of Profits of Associated Companies was $20.70 million for NM07 compared to $14.62 million for NM06, an increase of 41.61 per cent. Finance Charges for the period under review was $112.14 million compared to $104.71 million for NM06. As a result, the Loss Before Taxation was $14.49 million for NM07 compared to a Loss of $717.66 million for the same period in the last financial year.
Taxation for NM07 totaled $65.81 million compared to $58.53 million for NM06. Thus, the Loss After Taxation was $80.29 million for NM07 and $776.19 million for NM06, an improvement of $695.89 million.

The shares of GHL last closed at a price of $25.00 on the local market. The performance of the Group for the NM07 has indeed been an improvement over the corresponding period of fiscal 2006 and as stated by the Chairman, the Group should return to overall profitability in the near future. Additionally, GHL continues to maintain a healthy Balance Sheet, with a Net Asset Value per share of $17.39 (NM07) which translates into a market to book ratio of 1.44 times at the current price. Thus, we continue to recommend a LONG TERM BUY on this share.

Gia Singh
WISE Equity Research Team