() has value as a pure-play Asia-Africa insurer following the demerger of the US arm, Jackson Financial, which becomes effective next week.
That at least is the conclusion of (), which raised its share price target to 1,800p a share from 1,744p while repeating its ‘outperform’ recommendation.
“The stock has recovered as we expected it to once the demerger was finally announced, and we think this removes a key uncertainty that should reduce the cost of equity,” the investment bank said in a note to clients.
“However, we still see further valuation upside potential.”
()’s analysts pointed out that rival AIA trades at 1.9-times enterprise value, while Prudential, at 1,537p a share, is rated at just 1.2-times.
It said this was is “an unwarranted discount even after adjusting for economic assumption differences or AIA’s stronger China franchise”.