Thai Reinsurance
TP hike on higher THREL IPO price BUY
Thai Reinsurance Plc
THREL IPO price beats estimate. The IPO price of THAIRE Life Assurance Public Company Limited (THREL) has been set at Bt9.5/share, above our expectation of Bt6-8/share. We thus raise THRE target price (TP) to Bt5.7 to fine tune with THREL’s IPO price. Our old TP for THRE of Bt5.4 is based on a fair value for THREL of Bt7.5/share.
Watch for THRE B/S clean up after THREL IPO. THRE is considering taking part of the gain from selling THREL in its IPO to make a bullet booking in 3Q13 of additional reserves for potential flood claims to clean up its balance sheet. This could be a ST negative surprise but is a good move for the long run. It may also pave the way for the auditor to certify its financial statement, cementing investor confidence.
Maintain Buy. We maintain BUY on THRE, underpinned by upcoming catalysts: IPO of THREL at the end of September, resumption of dividends in 2014 and credit rating upgrade by S&P within the next three years, allowing THRE to return to the international reinsurance market.
