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3 Things Investors Should Know About Great Eastern Holding Limited

Great Eastern Holding Limited (SGX: G07) may not be a well-known company amongst investors in Singapore, but it is actually a huge company in a number of ways.

It is the oldest and most established life insurance group in Singapore and Malaysia; it has S$68 billion in total assets; and it has a market capitalisation of over S$9.8 billion. The company also happens to be a subsidiary of Singapore banking giant Oversea-Chinese Banking Corp Limited (SGX: O39).

Investors and potential investors in Great Eastern may want to know the following three things about it:

1. Great Eastern has been growing its business over the last five years

From 2011 to 2015, the company has grown its gross premium from S$6.43 billion to S$8.76 billion. This translates to an 8% compound annual growth rate.

Moreover, the company’s embedded value has also stepped up by 11% annually from S$7.47 billion in 2011 to S$11.0 billion in 2015. Embedded value is a metric used to measure the intrinsic value of a life insurance company which is based on discounted cash flow calculations.

As another measure to look at Great Eastern’s growth, the company’s book value per share has climbed by 12.3% per year from S$8.27 in 2011 to S$13.16 in 2015.

2. It has a history of consistently paying a dividend.

The company has been paying a dividend each year since at least 2011. Moreover, its ordinary dividend has stepped up from S$0.37 per share in 2011 to S$0.50 in 2015.

At its current share price of $20.79, it has a yield of 2.4% thanks to its ordinary dividend seen in 2015.

3. A historically low valuation

Great Eastern has a price-to-book ratio of 1.6 right now. As you can see in the chart below, this is actually near a five-year low.

great-easterns-price-to-book-ratio-over-last-five-years
Source: S&P Global Market Intelligence

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.