Prudential Share Discussion Threads

[robincap] 17/6/2021 22:47

I am sceptical about Pru and would rather short it - why? a) Business performance in Asia: Indonesia not growing on a B/S base; HK collapse of new business from CN also material B/S risk regarding interest rates in the current environment; Malaysia not doing great on health. b) Jackson - it is unclear why the abrupt outing of senior management. Also the valuation of the Athena deal is strange - 80% RBC gain as a consequence of the reinsurance plus 500M for 1/9 ot the company. This means Pru was paid in total about 1.4 M (considering 100% RBC is about 1,1bn.) The inforce yields 100M p.a. which means 1bn as a PV. Hence the total Jackson remaining franchise is valued at about 3.6bn and now a capital raise is needed - despite of the fact that I own the same post demerger. Hope somebody can help me why I am wrong

[riskonricky] 17/6/2021 18:38

Any ideas why we are moving so abruptly today?

[churchill2] 07/6/2021 12:46

Hi Whatja According to the CFO the proposed raise of 2-3 billion dollars was to reduce some expensive borrowing. Presumably to strengthen the Balance Sheet. Not much recognition for the value of Jackson. In a few months time we could have the PRU at £15 and Jackson/M&G at a combined value of £5. A more exciting story would be an old fashioned scrip issue at fifteen for one. Not popular but I believe Tesla,Apple and even Warren Buffet have tried it.

[whatja] 07/6/2021 08:57

Like the post churchill2. It is hard making a long-standing story sound interesting. Growth of pulse is promising and the business is operating at scale in its larger markets. The key question for me is what will they use the expected 2-3bn fund raise for? General corporate purposes and bet reduction is not sufficient. They need a more exciting story. Hopefully Jackson will be done by September and the market can focus on the new pru.

[churchill2] 06/6/2021 15:09

Ploughed through the Investor Day Presentation last night. No shortage of facts and figures to keep shareholders well informed. Not keen on the Q&A presentations. It was to easy to avoid any awkward questions asked as there was no follow up format. To sum up I would say the overall message imparted was the PRU is doing well in difficult circumstances and future prospects look brighter. They need to be because comparing the share performance of M&G and the PRU since the Demerger is I am sure not what was expected. Including reinvested dividends M&G is up 35% in comparison to 18% for the PRU. I would imagine if this under performance carries on our Asian competitors will be licking their lips.

[churchill2] 18/5/2021 09:33

Yes a lot of factors in the mix political tensions, exchange rates, border reopening etc but even so a rerate will provide a valuation based on future prospects.

[whatja] 17/5/2021 12:47

You would expect PruAsia to rerate once the US operations are separated and the equity raise is completed....it is a pity the raise is needed at all.

[churchill2] 16/5/2021 21:26

Looking at the first quarter numbers nothing has changed my opinion of the wide disparity in the value of the PRU (£40B) compared with A1A (£114B) before allowing for the difference in market share. Other points to note there is a virtual conference on the 2nd June so presumably management will have updated news for shareholders or why bother. Management has certainly not covered itself in glory in the last couple of months as shown by the market reaction to the Jackson confusion as the results were in line with A1A for the first quarter apart from the difference in A1A better profit margins.

[whatja] 29/3/2021 20:20

Judging by the timing, it looks like some disagreement with the new chairman and they were both dismissed....you would think you just pay them off for a non disclosure agreement.

[churchill2] 29/3/2021 19:32

It seems the demerger of Jackson has run into a snag. Details are sketchy but it revolves around the recent removal of the CEO and CFO. I guess there is litigation involved which will delay the process. A shame because I understand the financing of the deal had been well received and was proceeding at pace.It also explains the current share weakness.

[churchill2] 12/3/2021 21:38

Figures out from A1A this morning disappointed the HK Stock Market and the share price went down 5.33%. Also they did not compare favourably with the PRU especially over the second half of 2020. What has this to do with the PRU. In Asian markets the PRU is approximately 60% the size of A1A. For example one of the most important metrics is embedded value and at the end of 2020 the EV for the PRU was $44.2B as compared to A1A of $67.2B which is near enough 66%. What is really interesting A1A is valued at £107 while the PRU on the closing price tonight £40B minus the value of Jackson when it is demerged. I have pointed out previously that I believe the PRU is undervalued and that is stil the case. The other point of note A1A for the first two months of this year compared with last year state business is up 15%.

[churchill2] 08/3/2021 18:11

Hi Whatja Yes sentiment has changed dramatically. Value over growth shares as Interest on US bonds improves week by week. Athene was 33 dollars when the deal was done now taken out above 50 dollars. Jackson rates similar to Athene apart from a poor couple of years lately which probably accounts for the management changes.

[whatja] 08/3/2021 17:54

The valuation of Jackson is a tricky one. When Pru sold 11% to athene it got 500m implying a 4.5bn valuation. The Embedded Value is said to 10-12bn. It seems Pru was something of a forced seller in the athene deal. Maybe market sentiment has changed now and the value is somewhat higher.

[churchill2] 08/3/2021 17:03

Interesting development this morning Athene has been absorbed by Apollo a large private equity company who previously owned 30 per cent. The deal values Athene at $11 billion and the combined value of the two companies at $29 billion. I have been trying to work out a value for Jackson. My estimate would be in the region of 8 to 10 billion dollars for the whole company bearing in mind only 70% of the company is being demerged initially. A1A one of our main competitors in Asia reports this Friday so it will be interesting to compare the numbers with the PRU for the 2020 year.

[its the oxman] 03/3/2021 14:19

Whatever it is they just need to get on with it and stop mulling it over.

[wmb194] 03/3/2021 09:44

Unless we'll be able to take part via PrimaryBid it doesn't seem to: "Our preferred route is a fully marketed global offering to institutional investors concurrent with a public offering in Hong Kong to retail investors. As an Asia focused company, the Group believes there are clear benefits from increasing both its Asian shareholder base and the liquidity of its shares in Hong Kong."

[suetballs] 03/3/2021 09:38

On the proposed Asian capital raise - " the allocation of any offering will take into account a number of criteria including the interests of existing shareholders" I hope that will mean us - my chequebook is ready and waiting. Suet

[its the oxman] 03/3/2021 09:09

Over 1500p, results can't be that bad.

[luderitz] 02/3/2021 18:27

Certainly been an impressive rise of late, my be sell on the news though tomorrow.

[suetballs] 02/3/2021 17:41

2020 results tomorrow morning - 8.30. Suet

[1jat] 18/2/2021 13:44

A strategic investor like a sovereign wealth fund in Asia would be a clean way to raise funds and would not create selling pressure if the entry point is close to the market value. My favoured route.

[churchill2] 17/2/2021 19:57

Hi 1jat It is very unusual for a CEO and CFO to be asked to leave immediately. Obviously something has gone wrong and they are being held responsible.I agree with you the replacements look temporary stopgaps rather than new dynamic management. However this is just a sideshow the real action is HK. Must be some good news in the pipeline for the dramatic recovery in the share price.It just strikes me that whatever portion floats on the HK exchange investors will be drawn to the huge disparity with A1A. Not long to wait and all will be revealed.

[1jat] 17/2/2021 16:31

Churchill2 Two long term internal promotions to CEO and CFO would not impress the market much. Maybe the previous execs were working on a MBO. Where is a SPAC when you need one