Karachi, December 29, 2021 (PPI-OT): AICL – Life Assurance’s IPO to unlock value

A prospective valuation upside exists in AICL upon Adamjee Life Assurance (ALAC) listing at PSX as the current market price of Rs39/share only reflects the investment portfolio of Rs32/share (30% discount) and core operations to a partial extent, rendering General and Life Insurance business for a negligible value.

Price discovery from ALAC’s upcoming listing lifts our TP for AICL to Rs66/share. We reiterate our ‘Buy’ stance as the stock currently trades at an attractive P/E of 6.1x, and offers an 8% DY.

We highlight AICL’s 7% holding in PKGP and LPL each will benefit in the scenario of potential hefty dividend announcements from the respective IPPs post recent receipts from the government. Dividend payout of every Rs5/share by each IPP would result in incremental EPS of Rs0.65 (+10% to base case earnings).