MS&AD Insurance Group Holdings Inc 8725

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MS&AD: Fair Value Adjusts to JPY 2,000 on Share Split, No Change in Our View

Lorraine Tan Mar 28, 2024

Following a 1:3 stock split on March 28, 2024, our fair value estimate for MS&AD has adjusted to JPY 2,000. There are no changes to our view and earnings projections for the company ahead of its full-year results release in mid-May. We view the shares as relatively overvalued, with benefits from Japan's exit from negative interest rates largely reflected in its current share price.

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Price vs Fair Value

View History

8725 is trading at a 317% premium.

Price

JPY 2,781.00

May 2, 2024

Fair Value

JPY 664.22

Mar 27, 2024

Uncertainty

Medium

1-Star Price: JPY 685.00
5-Star Price: JPY 489.13
Economic Moat: Nrjd
Capital Allocation: Pdzpwkxb

Bulls Say, Bears Say

Bulls

MS&AD trades at a steeper discount to adjusted book value than its closest peers.

Bears

We believe MS&AD has less excess capital than Tokio Marine and Sompo.

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Trading Information

Previous Close Price: —
Day Range: —–—
52-Week Range: —–—
Bid/Ask: — / —
Market Cap: —
Volume/Avg: — / —

Key Statistics

Price/Earnings (Normalized): 7.23
Price/Sales: 0.51
Dividend Yield (Trailing): 2.88%
Dividend Yield (Forward): 2.88%
Total Yield: 3.36%

Company Profile

MS&AD is Japan’s second-biggest nonlife insurer, trailing industry leader Tokio Marine in the scale of global operations although not in Japan. Like Tokio Marine and Sompo, MS&AD has grown into a second-tier presence in the domestic life insurance market since life and non-life insurance were mutually deregulated in 1996. Overseas, it is less focused on the US market than its two Japanese rivals and more focused on emerging Asia, but its acquisition of Lloyd’s syndicate Amlin in 2017 has increased its exposure to the European and North American markets. MS&AD has historical business connections with the Mitsui and Sumitomo groups (the ‘MS’ in the company name) and has a long-term partnership with Toyota Motor that is advantageous in acquiring auto insurance customers.

Sector: Financial Services
Industry: Insurance - Property & Casualty
Stock Style Box: Large Growth
Total Number of Employees: 38,367
Website: http://www.ms-ad-hd.com

Competitors

Valuation

Metric	8725	8766	8750
Price/Earnings (Normalized)	7.23	16.01	16.28
Price/Book Value	1.14	2.23	1.18
Price/Sales	0.51	1.45	0.39
Price/Cash Flow	52.02	26.97	14.90

Price/Earnings

8725

8766

8750

Financial Strength

Metric	8725	8766	8750
Quick Ratio	—	—	—
Current Ratio	—	—	—
Interest Coverage	40.70	29.69	10.12

Quick Ratio

No chart available

Profitability

Metric	8725	8766	8750
Return on Assets (Normalized)	1.56%	2.54%	0.74%
Return on Equity (Normalized)	11.73%	18.24%	16.29%
Return on Invested Capital (Normalized)	9.76%	17.68%	10.27%

Return on Assets