In the Thailand insurance sector, Bangkok Life Assurance Public Company Limited (SET: BLA) has recently been upgraded to an Overweight (OW) rating by JP Morgan due to the company’s substantial room for near-term earnings revisions. This upgrade comes amidst a surge in Thailand life insurance stocks over the past three weeks, driven by a robust recovery in the equity market as BLA gained 17% and Thai Life Insurance Public Company Limited (SET: TLI) rose 24% compared to the SET Index.
Presently, Thai Life Insurance and Bangkok Life Assurance (TLI/BLA) shares are trading at 10x/8x FY25E Price-to-Earnings (P/E) ratios, offering dividend yields of 4% and 3%, respectively. The upgrade of BLA to OW from Neutral (N) is supported by its trading pattern linked to near-term earnings consensus adjustments, with investment profits contributing over 80% of pre-tax earnings.
Analysts predict that a 10% shift in the SET Index could lead to a more than 15% change in earnings, demonstrating significant earnings sensitivity. Moreover, a robust recovery in new life sales and in-force book growth for BLA indicates a positive outlook for earnings and balance sheet expansion.
Head of Asia Pacific ex-JP/CN Equity, Rajiv Batra, and Head of Thailand Research, Kae Pornpunnarath, have identified BLA as a potential recipient of inflows from the Vayupak Fund, given its ESG rating (AA).
While Thailand Life Insurance (TLI) could also benefit, its lower new life sales volume and absence of an ESG rating may pose challenges. As a result, BLA is preferred over TLI for investment opportunities in the Thailand insurance sector.
