Company Report Library

Stocks in Focus: Prudential

This week I am looking at Prudential, the multinational life insurance and financial services company, following its recent trading update covering the first nine months of the year.

I last wrote about Prudential a year ago, after the company had seen significant growth from the Asian market, as a result of a growing and increasingly affluent Asian middle class that had driven demand and sales.  One year on and the company has announced a 15 per cent rise in new business profit in Asia to the end of September. The group also reported record performances in some of its Asian operations led by increasing sales in health and protection products.  As a result, Asia has overtaken the US as the largest contributor for Prudential’s profits earlier this year.

In other areas, M&G Prudential, the UK and European business, has also seen strong performance, with an increase of 18 per cent in new business profit due to continuing demand for its PruFund range of products.

Earlier this year Prudential announced its plan to demerge the UK and European business, which is valued at around £12bn and on an earnings multiple of 16x, against an industry average of 13x. This will result in two separately-listed companies, each with their own distinct investment prospects.  Despite some uncertainties, the demerger should be a positive for both companies, in particular helping management of Prudential to continue to focus on building out their Asian operation. Mike Wells, the group CEO, continues to believe that profitable growth prospects of the Asian businesses remain substantial and are central to the Group’s long term growth ambitions.

Prudential reassured shareholders that it was making good progress with the demerger, and we expect to see more information regarding this in the full year results due early next year. 

Subscribe to our newsletter to receive all the latest insights direct to your inbox