Great Eastern Holdings: 39% Net Profit Growth – Financial Analysis and Investment Recommendation

Business Description

Founded in 1908, Great Eastern Holdings Limited is a market leader and trusted brand in the insurance sector in Singapore and Malaysia. With over S\$100 billion in assets and more than 16 million policyholders, the company provides insurance solutions through three main distribution channels – a tied agency force, bancassurance, and financial advisory firm Great Eastern Financial Advisers. The group also operates in Indonesia and Brunei.

Industry Position and Competitive Landscape

Great Eastern Holdings holds a strong position within the insurance industry, particularly in Singapore and Malaysia. It competes with other large insurers in the region but maintains a competitive edge through its well-established brand, comprehensive product offerings, and extensive distribution network. The company is a subsidiary of OCBC Bank, which enhances its market presence and financial stability.

Revenue Streams and Customer Base

The company’s revenue streams primarily come from insurance premiums, investment income, and fees from financial advisory services. It serves a diverse customer base, including individuals and corporate clients, and has a significant number of policyholders from government schemes.

Financial Statement Analysis

Income Statement

For the nine months ended 30 September 2024, Great Eastern Holdings reported a 39% increase in Profit Attributable to Shareholders, reaching S\$860.5 million. This growth was driven by higher profits from the insurance business and favorable investment performance from shareholders’ funds.

Balance Sheet

The company’s balance sheet remains robust with strong capital adequacy ratios well above the minimum regulatory levels, indicating financial stability and the ability to meet policyholder obligations.

Cash Flow Statement

Details on the cash flow statement were not provided in the document, but the significant profit growth suggests positive operating cash flows and efficient business operations.

Key Financial Highlights

• Profit Attributable to Shareholders grew by 39% to S\$860.5 million.
• Total Weighted New Sales increased by 19% to S\$1,363.3 million.
• New Business Embedded Value grew by 13% to S\$515.8 million.

The report date is 6 November 2024, covering the financial results for the nine months ended 30 September 2024 [[1]].

Strategic Initiatives

Great Eastern Holdings launched new solutions in the third quarter to help customers grow and preserve their wealth. These include Great Wealth Advantage 4, an ILP with a premium bonus feature for regular savings, and Prestige Legacy Index, a new index-linked universal life plan for affluent customers. Additionally, the Great Legacy program was initiated to assist Singaporeans with legacy planning needs [[2]].

Investment Recommendation

If You Are Currently Holding the Stock

Given the strong financial performance, robust profit growth, and strategic initiatives to enhance product offerings and customer engagement, it is recommended to hold the stock. The company’s strong market position and continued focus on innovation are likely to drive sustained growth.

If You Are Not Currently Holding the Stock

The significant profit growth and strategic initiatives present a compelling case to consider buying the stock. Great Eastern Holdings’ strong financial metrics and market position make it an attractive investment opportunity.

Disclaimer

This analysis is based on the financial report provided and does not constitute financial advice. Investors are encouraged to conduct their own research or consult with a financial advisor before making investment decisions.