Our opinion on the current state of MOMMET(MTM)
Momentum Metropolitan (MTM) is a JSE- and Namibian-listed insurance company, formed through the merger of Momentum and Metropolitan in December 2010. The company provides a wide range of short- and long-term insurance products and financial services. It was the first insurance company to achieve level 1 BBBEE status. However, it has been scaling back its African operations by closing its businesses in Mozambique, Mauritius, Zambia, Tanzania, and Swaziland.
At the time of the merger, the combined entity held 24% of South Africa's life insurance market. This has since declined to 17%. The company faced substantial challenges during the COVID-19 pandemic, paying out nearly R4 billion in death claims in Q1 2021 due to the second wave—three times the expected amount. In response to the pandemic, it has also reduced its office space requirements, adapting to the increased prevalence of remote work.
Recent Developments:
1. Leadership Change: Jeanette Marais assumed the role of CEO on 30th September 2023, succeeding Hilgard Meyer.
2. Results for the Year to 30th June 2024:
- Headline earnings per share (HEPS): Increased by 39%.
- Return on embedded value: Achieved 13.3%.
- Operating profit: Rose 31%, from R2.755 billion to R3.608 billion.
- Momentum Retail saw a decline in operating profit due to lower market variances and increased expenses.
3. Update for the 3 Months to 30th September 2024:
- Recurring premium income: Up 8%.
- Assets under management (AUM): Increased 17% to R280 billion.
- Operational performance was supported by satisfactory new business performance across most units. Improving economic indicators have started to positively affect business results.
Technical and Valuation:
- The share began its upward movement in May 2024, and it was added to the Winning Shares List (WSL) on 24th July 2024 at 2402c. It has since risen to 3000c.
- It trades on a price-to-earnings (P:E) ratio of 10.05 and offers a dividend yield (DY) of 3.33%.
- The share appears reasonably priced at current levels and is likely to benefit from further economic improvements and strong operational performance.
Momentum Metropolitan is well-positioned for growth, with improving business fundamentals and an attractive valuation. Its gradual recovery in market share and increased operational efficiency under new leadership make it a compelling long-term investment.
At the time of the merger, the combined entity held 24% of South Africa's life insurance market. This has since declined to 17%. The company faced substantial challenges during the COVID-19 pandemic, paying out nearly R4 billion in death claims in Q1 2021 due to the second wave—three times the expected amount. In response to the pandemic, it has also reduced its office space requirements, adapting to the increased prevalence of remote work.
Recent Developments:
1. Leadership Change: Jeanette Marais assumed the role of CEO on 30th September 2023, succeeding Hilgard Meyer.
2. Results for the Year to 30th June 2024:
- Headline earnings per share (HEPS): Increased by 39%.
- Return on embedded value: Achieved 13.3%.
- Operating profit: Rose 31%, from R2.755 billion to R3.608 billion.
- Momentum Retail saw a decline in operating profit due to lower market variances and increased expenses.
3. Update for the 3 Months to 30th September 2024:
- Recurring premium income: Up 8%.
- Assets under management (AUM): Increased 17% to R280 billion.
- Operational performance was supported by satisfactory new business performance across most units. Improving economic indicators have started to positively affect business results.
Technical and Valuation:
- The share began its upward movement in May 2024, and it was added to the Winning Shares List (WSL) on 24th July 2024 at 2402c. It has since risen to 3000c.
- It trades on a price-to-earnings (P:E) ratio of 10.05 and offers a dividend yield (DY) of 3.33%.
- The share appears reasonably priced at current levels and is likely to benefit from further economic improvements and strong operational performance.
Momentum Metropolitan is well-positioned for growth, with improving business fundamentals and an attractive valuation. Its gradual recovery in market share and increased operational efficiency under new leadership make it a compelling long-term investment.
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