James Gard: Welcome to Morningstar. Making its debut as a stock of the week is insurer Prudential, which has just put out full year results. The “man from the Pru”, a door to door salesman peddling insurance, is long gone, and now the company focuses on the dynamic economies of Asia and Africa. Shares fell nearly 10% on Wednesday in what our analyst Henry Heathfield describes as a “messy” set of figures. Earning per share forecasts were missed by some margin, for example.
But for various accounting reasons, investors don’t really have any long-term figures to compare – especially because Prudential is relatively new in its current form. Heathfield says you have to dig a bit deeper to find the positives. As an Asian-focused business, the re-opening of China and Hong Kong economies is good news. New business is increasing and revenue margins are better than expected. While Prudential has no economic moat, he flags up a potential competitive advantage in its app called Pulse. AI is used in many industries now but life and health insurers are leaning heavily on data. Heathield thinks this “health ecosystem” will help the analysis of behavioural trends and how those affect claims. Prudential’s fair value estimate was lowered to £14.60 after the results but this is still 40% its current market price. For Morningstar, I’m James Gard.
