• We attended BVH’s AGM in Hanoi on June 26. The main agenda was to review 2023 business results and to approve 2024 business targets and FY2023 cash dividends. 
• 2024 guidance includes parent company revenue of VND1.65tn (USD65mn; +5% YoY) and NPAT of VND1.2tn (USD48mn; +3% YoY). Consolidated level 2024 guidance was not included in the proposal to the AGM. We note that BVH has a track record of consistently beating its AGM guidance. 
• The AGM approved a 10% cash dividend on par value for FY2023, which implies a 2.1% dividend yield (based on the current share price) — higher than our expectation of 9% of par value.
• The Q&A section focused on BVH’s performance in H1 2024, the company’s capital raising plans and long-term strategy. 

Preliminary H1 2024 results were in line with our expectation. In the Q&A session, management stated that H1 2024 results were on track with its plan and expressed confidence that the business targets proposed at the AGM could be exceeded. Preliminary H1 2024 consolidated PBT was VND1.3tn (+5% YoY; completing 52.5% of the company’s target). We estimate that H1 2024 consolidated PBT completed 53% of our full-year forecast, which is in line with our expectation. Overall, BVH’s business guidance at the parent level is conservative, in our view. Although interest rates remain at relatively low levels, management expects the company’s ROI to be maintained at the current level rather than decreasing due to its flexibility in portfolio management.

BVH retained its top market share amid sluggish systemwide life premiums in 5M 2024.  According to management, systemwide 5M 2024 new business premiums decreased 26% YoY, in which premiums received via traditional agency decreased 19% YoY and premiums received via the bancassurance channel decreased 43% YoY. The company attributed the weak systemwide premiums to (1) slow recovery of the economy and (2) tightening regulations on insurance activities regarding operational processes, distribution channels (especially the requirement to record the consulting process for investment-linked products). Management believes BVH is least impacted by the turbulence in the bancassurance segment because traditional agency accounts for more than 90% of its total distribution network. BVH retained its top total premium market share at 23.3% in 5M 2024. 

Management expects new developments in its long-term plan to raise new capital for Baoviet Life and Baoviet Insurance (non-life insurer). BVH stated that it will design a plan to be proposed to shareholders about (1) reducing State ownership (from 2026 onwards) and increasing capital and (2) changing the legal business status of Baoviet Life and Baoviet Insurance (non-life insurer) from limited liability companies to joint-stock companies to increase funding flexibility. The company has been working on valuation of these two subsidiaries’ fixed assets since last year and is in the progress of looking for potential investors for these subsidiaries. We understand that the equitization process of these subsidiaries needs approval and guidance from the authorities at many stages and we think it could take time for BVH to raise new capital through this plan. Additionally, BVH has a plan to inject additional capital into Baoviet Life this year using the remaining proceeds from raising new capital in the private placement in 2019. 

Sumitomo Life has been actively supporting BVH’s business model. The representative from Sumitomo Life (BVH’s strategic shareholder) stated that they have assigned a person with deep industry expertise from their company to assist BVH’s CEO since last year. The strategic partner has been actively involved in supporting BVH with actuarial issues, distribution network design, risk management and information technology. The representative stated that Sumitomo Life believes there is high potential for BVH’s business, and this is not fully reflected in its valuation.

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