KURASIA ... Mar10

JF APEX SECURITIES Review & Highlights

TPBID scheme at “formulation” stage – BNM has announced on last Friday that the proposed Third Party Bodily Injury and Death or “TPBID” scheme by the Government is still at the formulation stage. In the Prime Minister’s Budget speech, it has been mentioned that “this scheme is expected to be introduced by mid-2010”.

Expect positive impact on Kurnia’s earnings – Although the TPBID scheme is still at the formulation stage, we believe that there is high chance of it being passed through due to significantly lower TPBID scheme charges as compared to other
countries. Should it materialized, we expect the insurance industry to benefit from this. As 85% of Kurnia’s revenue (for 6-months period ended Dec-2009) is derived from motor insurance with 6% of it is from pure 3rd party insurance, we expect positive impact on Kurnia’s earnings should this materialize.

Changes in Kurnia boardroom – There is some update on the changes in Kurnia’s boardroom as Datuk Mohd Saufi bin Abdullah has vacated his office as a result of his non attendance of more than 50% of the Board meetings held during the last financial period. Datuk Mohd Saufi holds the position of “Non-Executive Director” and “Member of Audit Committee”.

Upgrade to TRADING BUY with TP RM0.67 – In view of the high chance of new TPBID scheme being passed through coupled with the higher deviation of market price from our estimated fair value of RM0.67, we upgrade our recommendation to TRADING BUY. Our target price and earnings estimate remained unchanged as we have not factored
in the possible new premium of 3rd party as it is still in the formulation stage.