Halk Sigorta Outperform
Owned by Yapi Kredi Bank, Halk Sigorta is one of the largest
insurance companies in Turkey. With premium generation of USD 120 mn
(non-life), Halk Sigorta ranked seventh among 65 insurers in Turkey.
Halk Sigorta carries out its life insurance operations through its
wholly owned subsidiary Halk Yasam. With 17% market share, Halk Yasam is
the second largest life insurance company in Turkey. We believe Halk`s
unlisted life subsidiary is more valuable than itself. This hidden value
will become more visible with the pension reform and through a future
flotation of Halk Yasam.
Halk Sigorta and Halk Yasam will be renamed as Yapi Kredi Sigorta
and Yapi Kredi Yasam respectively. This will have a positive impact on the
Company since the current name Halk is associated with state owned Halk
Bank.
Although we anticipate premium generation to increase by 25% in
2000, earnings will more than double to USD 54 mn because of increased
profitability of insurance operations and hefty dividend income from Halk
Yasam.
Halk Sigorta trades at a 47% discount compared to its NAV of USD 362
mn (non-life USD 146 mn and life USD 186 mn). We initiate our coverage for
Halk Sigorta with an OUTPERFORM rating due to strong upside potential
and soaring net earnings.
insurance companies in Turkey. With premium generation of USD 120 mn
(non-life), Halk Sigorta ranked seventh among 65 insurers in Turkey.
Halk Sigorta carries out its life insurance operations through its
wholly owned subsidiary Halk Yasam. With 17% market share, Halk Yasam is
the second largest life insurance company in Turkey. We believe Halk`s
unlisted life subsidiary is more valuable than itself. This hidden value
will become more visible with the pension reform and through a future
flotation of Halk Yasam.
Halk Sigorta and Halk Yasam will be renamed as Yapi Kredi Sigorta
and Yapi Kredi Yasam respectively. This will have a positive impact on the
Company since the current name Halk is associated with state owned Halk
Bank.
Although we anticipate premium generation to increase by 25% in
2000, earnings will more than double to USD 54 mn because of increased
profitability of insurance operations and hefty dividend income from Halk
Yasam.
Halk Sigorta trades at a 47% discount compared to its NAV of USD 362
mn (non-life USD 146 mn and life USD 186 mn). We initiate our coverage for
Halk Sigorta with an OUTPERFORM rating due to strong upside potential
and soaring net earnings.
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