Home » VectorVest » Buy GBGI says VectorVest: The Insurance Group Continues to Trade at a Discount Despite Substantial Progress at the Half Year

Buy GBGI says VectorVest: The Insurance Group Continues to Trade at a Discount Despite Substantial Progress at the Half Year

Guernsey based GBGI (GBGI.L) is a leading integrated provider of international benefits insurance, operating globally across over 120 jurisdictions. Trading principally as “The Global Benefits Group” or “GBG”, the Group distributes and underwrites health, life and disability, and travel insurance, with a client base that spans multinational corporations, expatriates, local HNWIs, international schools, non-profit organisations and international students. GBGI is a fully integrated insurance group providing services from policy sales to claims administration and servicing and is committed to delivering high levels of customer service.

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On August 10th 2018, GBGI published a trading update in advance of interim results for the six months ended 30 June 2018. GBGI reported continued growth in the business across its diversified product and regional footprint during H1 2018, recording year over year growth (adjusted for the Group’s exit from the Angolan market in 2017) in gross written premium as compared to the same period in CY 2017. GBGI said it anticipates that GWP and underlying net income (adjusted for certain one-off non-recurring expenses) for the year to 31 Dec 2018 will be broadly in line with initial expectations. CEO Bob Dubrish said GBGI had made a strong start to the third quarter…”and we are confident in our business model and that we are making good progress on our 2018 initiatives.”

Since May 2018, VectorVest members will have noted progress on the key RT (Relative Timing) and RV (Relative Value) metrics for GBGI. The RT metric, (a fast, smart indicator or a stock price trend) moved sharply higher in mid-July in line with the subsequent share price moves, and today logs the stock at 1.47 – excellent on a scale of 0.00 to 2.00. The RV metric, (an indicator of long-term price appreciation potential) again has moved sharply higher to register at 1.36, which is very good on a scale of 0.00 to 2.00. And at 18%, GBGI’s GRT (Earnings Growth Rate) metric is also rated as very good by VectorVest . At 104p, GBGI trades at a discount to the current VectorVest valuation of 135p.

The chart of GBGI.L is shown above over the past 10 months of trading. Earnings per share (EPS) is shown by the blue line study in the window below the price. EPS has grown by 30% over this period. Over the past three months the share has bottomed out and charted a double bottom at the 80p level. The share has broken upwards through a trendline defining the fall in the share price from January to May 2018. The share is on a Buy recommendation on VectorVest since the start of August 2018.

Summary: On the face of it, some investors may look past insurance group GBGI in favour of more exciting and dynamic growth companies with cutting edge technology. To do so would mean missing out on a highly investible proposition, offering cash generation, a solid management team and a decent 4.5% dividend yield. As the VectorVest stock selection system has shown time and time again, small companies such as GBGI can grow to become large companies that go on to form the backbone of many an investment portfolio. GBGI shares have delivered a sharp recovery since last week’s trading statement, and might just go onto become one of the stock market successes of 2018. Buy

Dr David Paul

August 15th 2018

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European Financial Publishing Limited T/A VectorVest UK (VectorVest) is authorised and regulated by the Financial Conduct Authority under register number 543038. You should remember that the value of investments and the income derived therefrom may fall as well as rise and you may not get back the amount that you invest. Past performance is not a reliable guide to the future. This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. If investors are in any doubt of the suitability of an investment given their individual circumstances, they are recommended to contact an investment manager or independent financial adviser who may be able to provide tailored advice. Opinions expressed whether in general or both on the performance of individual securities and in a wider economic context represent the views of VectorVest at the time of preparation. They are subject to change and should not be interpreted as investment advice. VectorVest and connected companies, clients, directors, employees and other associates, may have a position in any security, or related financial instrument, issued by a company or organisation mentioned on this site. European Financial Publishing Limited is a company incorporated in Scotland under Company Number SC357322 with its registered address at Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH. Email: support@VectorVest.com

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