In brief
- Stellar Insurance Growth: EGL’s insurance service results surged by 167.8% y/y, driven by strong premium growth from expanded satellite branches, digital initiatives, and enhanced brand promotions.
- Robust Profitability Despite Investment Headwinds: Even though net investment income fell by 19.2%, overall net income increased by 64.8% and profit-after-tax skyrocketed by 161.0%, nearly doubling the net profit margin.
- Controlled Expense Impact: Operating expenses rose by 14.8%, yet effective cost management—with impairment gains offsetting higher finance costs—kept net expenses’ increase to a modest 3.6%.
- Optimistic Outlook: EGL plans to leverage digital channels and strategic investments in low-risk securities to sustain growth, while OPEX and finance costs benefit from easing inflation and declining interest rates.
Enterprise Group Plc (“EGL”) released its unaudited FY2024 results on 26 February 2025, demonstrating a remarkable performance for the year. The earnings outturn was primarily driven by a stellar 167.8% y/y surge in insurance service results (GHS 510.9mn), powered by robust premium growth via increased satellite branches, digitalization and promotions that increased brand engagement and visibility. Despite a 19.2% decline in net investment income, the robust growth in insurance service results supported net income to GHS 904.7mn (+64.8% y/y), propelling net profit to GHS 504.1mn (+161.0% y/y). Operating expenses rose by 14.8%, reflecting the impact of prevailing economic challenges. However, net expenses increased by a modest 3.6%, as impairment gains effectively offset the rise in finance costs and operating expenses. Although investment securities expanded by 32.6%, investment income declined by 19.2% due to the lingering effects of the DDEP bonds and the emphasis on high-quality but low-yielding fixed deposits investments with Class A Commercial and Universal banks, which undermined EGL’s investment income. Additionally, other revenue posted impressive growth, accelerating by 43.6% y/y on the back of increases in fees from pension services and rental income on investment properties.
Outlook: Riding the digital wave to enduring growth
- In the year ahead, we expect EGL to expand its digital channel, targeting the youthful population while leveraging business intelligence, customer insights, and meticulous underwriting practices to drive disciplined, sustainable growth and reinforce its leadership in the industry.
- As the broader economy improves and demand for insurance products grows, we expect EGL’s insurance revenue to sustain its upward momentum, driven by the robust revenue mobilization efforts observed in 2024.
- We believe EGL is also well-positioned to capitalize on its enhanced investment capacity by reinvesting its growing revenue stream. The company plans to expand its investment portfolio and strategically channel funds into low-risk securities with competitive yields to generate consistent returns.
- Our projected decline in inflation over the coming year will ease the upward pressure on operating expenses and improve margins. Additionally, we anticipate a reduction in finance cost on the back of the declining interest rates, further supporting bottom-line growth.
Valuation: Under Review
- EGL is trading at a P/B value of 0.2x and we intend to re-initiate coverage on the stock soon.