Prudential - snaffling a few shares a suitable compromise? Chris Bailey writes...

Amber Rudd’s pal Simon Hume Kendall, the SFO, arrests, London Oil & Gas administration – ouzo time at ShareProphets. Read HERE

There are always many different shares to write about but I am surprised that I haven't troubled these pages with my thoughts on the Prudential (PRU).  As a self-confessed investment geek typically focused on longer-term themes and trends, there are few corporate names in the FTSE-100 as well set up as the Prudential with its growing exposure to the burgeoning Asian insurance market, a region where the last ten year renewal premium compound growth rate for the company has been a cool 18% and profits have grown even faster. No surprises to see this as regions that are growing, urbanising and becoming wealthier demand more insurance.  And the Pru has a very good position across countries such as Hong Kong, Malaysia, Indonesia, India and (more recently) China.  It has also not been shy in building exposure in Africa too.  Mix this in with a lengthy participation in the UK and US markets and in last week's update the company said it had 26 million customers, over £650 billion of funds under management and (even more amazingly) potential access to 4.2 billion of the world's population...

Bluejay Mining - Placing being sounded out - City source. Read HERE

Insurance is though an opaque sector but the good news for the Pru is that cash flows tend to be back-end loaded i.e. much of the customer acquisition and general cost and related tends to be in the earlier part of an insurance relationship and certainly my studies of the space have suggested some correlation between writing quality business one year and seeing boosted cash flow generation capabilities a few years later. Insurance names often refer to 'surplus' and it is fascinating to see in the company disclosures that the longer-term growth in free surplus, new written premiums and operating profit are all congregating around the same proportional levels.

From Nigel Somerville, the Deputy Sheriff of AIM: Woodford dog Netscientific clarifies on PDS, but is it telling the whole truth? Er....

Now you can do quite a lot with the £4 billion odd of surplus the company generated in 2018 but I like that the Prudential is not just sitting still and counting the cash. The more I look at business, the more I realise that the best corporate names keep the internal energy quotient high. In the Pru's case it is forcing through a regional and operational split.  Last year the demerger of the fund management arm M&G Prudential was announced - as well as the proposed sale of the UK book of business - to allow the continuing Prudential share to be focused on the cash generative US market and the growth markets of Asia and Africa.  This is progressing to plan and as with many spin-offs and related may induce opportunities to create value as global investors start to respect the sum-of-the-parts a bit more.

Read HERE: Bonmarche – update includes “sales since Christmas had been slightly above the level required” & “bank facility is expected to be sufficient” BUT…

Given a choice here and now, I would much rather have the continuing Pru business which accounts even today for getting on for three-quarters of the surplus generation and in a few years time will be in an even better position.  However a little bit of geek maths using the Pru's current market cap of £42 billion as a base, suggests to me that the M&G spin-off should be worth £12 billion+ (2% of AUM) and as a quarter of the business, the overall group should have a market cap more like £50 billion. I can handle a 20% rise in the share price assuming a fair global wind (and I admit that is an assumption) which would suggest a move back to the 19 quid odd levels of not so long ago.  Simply put - with a share like the Prudential (which also has a justifiable dividend yield of 3%) snaffling a few now and at each new pound below the current share price (£15 something a share, £14 something a share) is a suitable compromise between opportunity and the short-term perception vagaries towards the insurance space. Buy.

Verseon Placing : Neil Woodford spunks $10m investor cash (again) at wrong price – all that is rotten in his failing empire. Tom Winnifrith, The Sheriff of AIM, writes HERE

Filed under: Prudential, Simon Hume Kendall, London Oil & Gas, Bluejay Mining, Netscientific, Verseon, Woodford

GVC raises numbers but please no more number of the beast share sales says Chris Bailey

08/16/2019

The thoughts of Lucian Miers on the Burford fiasco

08/15/2019

Gold - rushing ever-higher. What I will do reviews Nigel Somerville...

08/14/2019

Eco Atlantic - what to do after a great first drill?

08/13/2019

Spin City at G4S. Chris Bailey writes...

08/12/2019

Aviva, Cineworld and Funding Circle reviewed by Chris Bailey

08/09/2019

Thomas Cook - doing the Fandango. Lucian Miers writes...

08/08/2019

Chris Bailey confesses he is now a Dominos Pizza customer, but to buy the shares?

08/07/2019

Volex - ahead of expectations. Buy say Tom Winnifrith & Steve Moore

08/06/2019

Petra Diamonds could still turnaround considers Gary Newman

08/05/2019

Opportunities in Barclays, Lloyds and ConvaTec? Chris Bailey reviews...

08/02/2019

Fresnillo - big drop in share price an opportunity? Gary Newman reviews...

08/01/2019

Columbus Energy Resources - a buy ahead of South West Peninsula drilling?

07/31/2019

Tesla Q2 another milestone on the road to bankruptcy and ruin says Lucian Miers

07/30/2019

Amino Technologies - a recovery buy suggest Tom Winnifrith & Steve Moore

07/29/2019

I remain calm and collected amidst the heat, M&A activity & as Sage stumbles says Chris Bailey

07/26/2019

RockRose Energy tip up nearly 450%, so what now reviews Gary Newman

07/25/2019

PZ Cussons - losses in Africa... but still a buy? Chris Bailey reviews...

07/24/2019

Block Energy - let winner run or take a healthy profit?

07/23/2019

Sell Netflix short as US subscribers back off says Lucian Miers

07/22/2019

OptiBiotix Health - scientific and commercial update adding to confidence?

07/19/2019

Thoughts On Thomas Cook & Kier from Lucian Miers

07/18/2019

Burberry - excitements sufficient? Chris Bailey reviews

07/17/2019

KEFI Minerals - Q2 2019 operational update, shares remain a Buy says HotStockRockets

07/16/2019

Angling Direct could have long-term potential says Gary Newman

07/15/2019

Hurricane Energy - Lancaster early production system delivering, Buy says Peter Brailey

07/12/2019

I remain to be convinced that asset sale will justify the valuation of Sound Energy says Gary Newman

07/11/2019

Imperial Brands goes progressive on its dividend...and the market likes it

07/10/2019

Tesla and me - Chris Bailey writes...

07/09/2019

Woodford Patient Capital Trust - still a sell says Lucian Miers

07/08/2019

Versarien - the only question is WHEN do the shares collapse says Lucian Miers

07/05/2019

Sainsbury - still searching for a strategy?

07/04/2019

Creightons - we having said we expected the results to highlight the value…

07/03/2019

PetroTal - rapid growth possible; Buy says Peter Brailey

07/02/2019

Explorers don't get any more exciting than Eco Atlantic, which is why I have been buying says Gary N

07/01/2019

Vela Technologies - Vibe Group gathering momentum & other potential. A buy from HotStockRockets

06/28/2019

OptiBiotix Health - North America deal; this is big, very big says Tom Winnifrith

06/27/2019

A Welcome Slice Of Luck and Thoughts On Purplebricks. Lucian Miers writes...

06/26/2019

I am poorer for not spotting Porvair...but should I care? Chris Bailey reviews...

06/25/2019

Whitbread - looks to continue to have a plan

06/21/2019

Ashtead - what to do after results statement? Chris Bailey reviews...

06/20/2019

Why the share prices of those involved in West Newton, Union Jack and Reabold, have not rocketed

06/19/2019

Board love at DS Smith whilst PZ Cussons is seemingly bored of talking. Chris Bailey writes...

06/18/2019

Boohoo & Reckitt Benckiser - management matters says Chris Bailey

06/14/2019

KEFI Minerals - remains a Buy

06/12/2019

Purplebricks - a Woodford fave that was a sell before and is now slam-dunk says Nigel Somerville

06/11/2019

Woodford Patient Capital Trust - Sell says Lucian Miers

06/10/2019

Joules - a rare retail jewel?

06/07/2019

Provident Financial - failure squared from man of the moment Neil Woodford says Chris Bailey

06/06/2019

Tesla - a fantastic sell says Lucian Miers

06/05/2019

A FTSE reshuffle look by Chris Bailey

06/04/2019

OptiBiotix Health - still a buy?

06/03/2019

Bilby - recovery potential?

05/31/2019

Shoe Zone - still a buy?

05/30/2019

Thomas Cook - still a sell says Lucian Miers

05/29/2019

Red Rock Resources - unbelievably cheap? Tom Winnifrith reviews for HotStockRockets

05/28/2019

Three shares which rose on a shabby day from Chris Bailey

05/24/2019

Marks & Spencer says it is getting match fit, should you back the rights issue?

05/23/2019

Updated thoughts on WH Smith, Halfords and Greencore from Chris Bailey

05/22/2019

Ryanair - what to make of it following results & those of great peer easyJet last week?

05/21/2019

Anglo Asian Mining - what after stellar 2018 results? Tom Winnifrith & Steve Moore review...

05/20/2019

Genel Energy has great growth potential says Gary Newman

05/17/2019

Getech - 2018 results, remains a buy considers the HotStockRockets team

05/16/2019

Ariana Resources - more positive news as we wait for more numbers says Nigel Somerville

05/15/2019

Bluebird Merchant Ventures - a buy from HotStockRockets

05/14/2019

Purplebricks headed for 50p says Lucian Miers

05/13/2019

Union Jack Oil - potential share price catalyst, as date set for Wressle planning appeal

05/09/2019

Purplebricks - keep selling says Tom Winnifrith

05/08/2019

Reach4Entertainment - 2018 results, much more to come?

05/07/2019

The implied valuation for Bould Opportunities looks crazy - strong sell says Gary Newman

05/03/2019

Optibiotix - full year numbers, the share price reaction wrong says Tom Winnifrith

05/02/2019

Sirius Minerals - the current drop a good buying opportunity? Gary Newman reviews...

05/01/2019

WPP & Royal Bank of Scotland - Chris Bailey reviews...

04/30/2019

Tesla remains a sell after Q1 fiasco says Lucian Miers

04/29/2019

Barclays, Sainsbury & Taylor Wimpey - Chris Bailey reviews...

04/26/2019

Dividend Munchers Easter 2019 update (and still beating Neil Woodford) says Nigel Somerville

04/24/2019

Gem Diamonds looks too cheap down here - buy for the longer term says Gary Newman

04/23/2019

Atalaya Mining remains a buy after recent updates says Gary Newman

04/18/2019

A couple of ShareProphets share tips of the year updates

04/17/2019

Lessons from Plus500 and time to sell more Purplebricks. From Lucian Miers...

04/16/2019

Polymetal - all that glistens can be gold says Chris Bailey

04/15/2019

Central Asia Metals produces another good set of results and remains a buy says Gary Newman

04/12/2019

Barclays - a low sentiment today to a mid-range sentiment tomorrow play suggests Chris Bailey

04/11/2019

Sosandar - are the shares expensive or cheap after trading update? Nigel Somerville reviews...

04/10/2019

Quilter - a buy if you are a bull on the UK market says Chris Bailey

04/09/2019

Coro Energy - enough potential reward from here for a speculative investment considers Gary Newman

04/08/2019

Sosandar slides again back towards IPO price - time to buy back in? Tom Winnifrith reviews...

04/05/2019

Tern - placing at just 8.5p and an excuse that just does not wash says Nigel Somerville

04/04/2019

Versarien and its shocking new American Appointment. A sell from Lucian Miers

04/03/2019

easyJet slides again but time to pull back on the share purchasing throttle?

04/02/2019

A German Teutonic train ratio tells you that FirstGroup remains cheap suggests Chris Bailey

04/01/2019

Petra Diamonds could add some sparkle to your portfolio suggests Gary Newman

03/29/2019

Accesso - still a sell suggests Steve Moore

03/28/2019

Union Jack Oil - funding at a not great price... but look at the potential of the projects it is for

03/27/2019

If Royal Dutch Shell is going to be a utility giant it has got to buy big says Chris Bailey

03/26/2019

IQE - a good opportunity for bears with patience says Lucian Miers

03/25/2019

Next - if you want an annuity large cap core non-food retailer...

03/22/2019

Argo Blockchain - now a buy?

03/21/2019

Wood Group - chill out despite fall on results?

03/20/2019

Prudential - snaffling a few shares a suitable compromise? Chris Bailey writes...

03/19/2019

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