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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Prudential plc    PRU   GB0007099541

PRUDENTIAL PLC

(PRU)
  Report
Delayed Quote. Delayed London Stock Exchange - 02/26 11:35:15 am
1408.5 GBX   -2.90%
02/23PRUDENTIAL : BofA Securities Downgrades Prudential Public Company to Neutral From Buy
MT
02/16PRUDENTIAL : UBS remains its Buy rating
MD
02/15PRUDENTIAL : Deutsche Bank reaffirms its Buy rating
MD
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Prudential : Jackson National's Profitable U.K. Divorce -- Heard on the Street

08/27/2020 | 07:47am EST

By Rochelle Toplensky

Breakups are never easy, but taking time to do it properly can be better for everyone.

Earlier this month insurer Prudential PLC confirmed plans to split from its U.S. business Jackson National. Activist investor Third Point has pushed for a quick breakup, but the London-listed company is taking its time. That gives investors the chance to buy in before the shares rerate.

The 172-year old insurer has two main businesses: Jackson National, which specializes in retirement annuities for Americans; and a Hong Kong-based business selling health and life insurance and investments to the growing middle classes in Asia and eventually Africa. Both are profitable, but incongruously grouped together as Prudential they appear to fetch a lower valuation than they might if assessed on their individual merits.

To address this so-called sum-of-the-parts problem, Third Point pushed for a spinoff of Jackson directly to shareholders. Prudential instead plans to list the U.S. business through an initial public offering some time before next summer. It will retain a stake that can then be sold down gradually.

Low interest rates and regulatory changes have prompted many insurance companies to split into more focused businesses in recent years. Prudential has already been through the separation ringer, having spun off its U.K. investment business M&G last October.

Jackson specializes in variable annuities, a stock-linked retirement product that is "extremely complex to analyze," according to Third Point. It isn't the only investor to believe the unit's value isn't reflected in Prudential's share price.

In June, Athene agreed to buy an 11% stake in Jackson for $500 million, which implies a $4.5 billion valuation. Apollo-backed Athene is an annuities specialist and seen by many as a shrewd investor. The number also is broadly in line with the valuation multiple of rivals such as Equitable Holdings and Lincoln National. That offers reassurance that Jackson is indeed worth more than Prudential's stock price implies, but the shares haven't rerated since the news.

Jackson isn't expected to need additional capital: Its regulatory risk-based capital solvency ratio was within the IPO target range at the end of June. It is likely to issue debt up to Pru's target leverage range of 20% to 25%, but won't pay dividends until after the listing.

The breakup could prompt a re-evaluation of Prudential's Asia-based insurance business too. According to Chief Executive Mike Wells, "every dollar of capital invested organically in Asia new business created nearly six dollars of value." Third Point argued the business is "materially undervalued" and UBS sees upside of about 15%. Shares in AIA, a similar business, trade for 19 times prospective earnings, compared with just nine times for Prudential's stock.

To be sure, the IPO plan could be delayed by a second wave of the pandemic or other market disruption. Pru's Asian growth prospects, which are mainly focused on emerging markets like India and Indonesia as well as mainland China and the troubled city of Hong Kong, could also stall.

Yet a better valuation for Jackson doesn't depend on Asia, and the IPO plans are in place. Reassuringly, Mr. Wells has done this before. Divorces usually only make lawyers richer, but Prudential's is one from which investors could also benefit.

Write to Rochelle Toplensky at rochelle.toplensky@wsj.com

 

All news about PRUDENTIAL PLC
02/23PRUDENTIAL : BofA Securities Downgrades Prudential Public Company to Neutral Fro..
MT
02/16PRUDENTIAL : UBS remains its Buy rating
MD
02/15PRUDENTIAL : Deutsche Bank reaffirms its Buy rating
MD
02/12PRUDENTIAL : Jackson Announces Leadership Changes Led By New CEO Laura Prieskorn
BU
02/12European ADRs Move Higher in Friday Trading
MT
02/12PRUDENTIAL : Receives a Buy rating from Jefferies
MD
02/11PRUDENTIAL : Barclays Lowers Prudential PT, Keeps Overweight Rating
MT
02/11PRUDENTIAL : Jefferies gives a Buy rating
MD
02/11PRUDENTIAL : Appoints New CEO, CFO Of US Business Ahead Of Demerger
MT
02/11PRUDENTIAL : Barclays reaffirms its Buy rating
MD
More news
Financials
Sales 2020 21 207 M 29 546 M 29 546 M
Net income 2020 2 081 M 2 899 M 2 899 M
Net Debt 2020 - - -
P/E ratio 2020 17,8x
Yield 2020 0,82%
Capitalization 36 564 M 50 918 M 50 941 M
Capi. / Sales 2020 1,72x
Capi. / Sales 2021 1,05x
Nbr of Employees 18 125
Free-Float 99,5%
Chart PRUDENTIAL PLC
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Technical analysis trends PRUDENTIAL PLC
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 1 459,91 GBX
Last Close Price 1 408,50 GBX
Spread / Highest target 20,2%
Spread / Average Target 3,65%
Spread / Lowest Target -29,0%
EPS Revisions
Managers and Directors
NameTitle
Michael Andrew Wells Group Chief Executive Officer & Executive Director
Mark Thomas FitzPatrick Group COO, CFO & Executive Director
Shriti Vinodkant Vadera Chairman
Stuart James Turner Executive Director & Chief Compliance Officer
Kaikhushru Shiavax Nargolwala Independent Non-Executive Director
Sector and Competitors
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PRUDENTIAL FINANCIAL, INC.11.08%34 428
AFLAC INCORPORATED7.69%32 976