I'm a Celebrity get me out of here27 Aug 2013 10:44
Well some folk on the aims bbs swear by the share prophets:-
Old Mutual: at 194p the shares look good value after a 12% share price fall -
Old Mutual, (OML) the life assurance company with a name that sounds like one which might have been invented by a pipe tobacco company for a product in the nineteen thirties, has never attracted me. It was never top of my mental investor curiosity and priorities list.
There are other life assurers on the London Stock Exchange which have been more investor friendly in terms of what they do and where they do it. Moreover Old Mutual had originally moved to London (a decidedly mature life assurance market) in what seemed to me a defensive move to diversify away from its home market in Southern Africa. I suppose that as an investment object of investment curiosity it came under the heading and category “Life is too short”; not a pun and nothing to do with actuarial mortality.
As it happens, the shares have performed well. Over five years it has handsomely out performed Aviva with an Old Mutual share price increase of 87% against a rise in the FTSE100 index of only 21%. To date, over five years, not as good as Legal & General (up 108%) or the Prudential up 131% in five years but nevertheless a good competitive performance.
Several things have now drawn my attention to the shares now standing 194p (last seen). First, there is a useful 3.2% dividend yield; second, a strong long term upward trend in the share price giving the equity what they call momentum appeal; third a strong asset backing of 210p (embedded value calculation) to which the share price now stands at a 7% discount; four, an exposure to emerging markets particularly to Africa and finally - the last interim results.
Turning to the half time results to 30 June, I note that adjusted operating profits increased by 14% to £801 million of which, its emerging markets business (which includes Southern Africa) increased 13%. Interim earnings increased 22% to 9.3p and the half time dividend payout was raised 20% to 2.1p with earnings cover of 4.4 times – much higher than the last annual cover. This is a share to be looked at. I shall add it to my buy list on the grounds that its looks good value for a rare combination of reasons: an above average dividend payout; a strong attributable asset value and exposure to the historical rise of African living standards; the company states that it has increased its market footprint to Nigeria, Ghana and Kenya. It also has businesses in the UK and US.
The market estimates a 12% increase in earnings this year to 19.6p and 11 next year to 21.7p; putting the shares on forward price to earnings ratios of 10 and 9 times, supported by a growing estimated dividends, giving estimated forecast dividends per share of 4.1% for this year rising to 4.5% next year, In my opinion good value at 194p.
- See more at: http://www.shareprophets.com/views/1364/old-mutua
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