Dolmen banking analyst Stuart Draper, in a note to clients in advance of a trading statement from IL&P on Monday, said that given the improving environment for life and pension sales, as well as the current record levels of Irish mortgage lending, this trading update should be justifiably upbeat.
“The environment for life and pension sales has been helped recently by a tax filing date in October, a better developed PRSA infrastructure, as well as the improving equity market backdrop.
"However, it is in 2004 that a meaningful recovery in life and pension sales will start to take hold, and there is plenty of further upside for the share price over the next few months as such a recovery is discounted,” he predicted.
Mr Draper believes that another catalyst for the share price in 2004 could be a successful disposal of the group’s British mortgage business, given its Ireland First strategy.
“IL&P has made it clear that this business will be sold once a reasonable approach is made,” he added.
Mr Draper said IL&P reported profit before tax and earnings per share of €189.5m and 58.2c respectively for the 6 months to the end of June.
“The dividend per share was not cut and was raised by 5% to 15c, leaving the shares on course to yield c.4.5% on the current share price. This provided some reassurance as to the strength of the company’s capital situation,” he added.
Mr Draper noted that IFSRA reduced the degree of complexity associated with sales of PRSA’s, reducing the level of advice given with each product sale.
This is likely to have helped kick-start IL&P’s PRSA sales.
“As a result, our view is that the share price is likely to continue to recover over the next few months.
“The shares have very limited downside from current levels, and our current 12 month price target of €13.50 (14% further upside) is based on 12x 2004 eps of €1.13,” he added.