Itqan Capital initiates coverage of Tawuniya with ‘buy’ rating, TP of SAR 90.3

Itqan Capital initiated its coverage for The Company for Cooperative Insurance (Tawuniya) with a “Buy” recommendation with a target price (TP) of SAR 90.3.

The brokerage firm said in a research note that Tawuniya profitability will continue its recovery, supported by compulsory health insurance as the Saudi government aims to increase the number of tourist arrivals and increase in local population.

Tawuniya’s key growth catalysts are compulsory health insurance and significantly diversified service offering, while its key risk factors are deterioration in motor insurance segment and decline in investment income, it indicated.

The brokerage expects the insurer’s earnings per share (EPS) to reach SAR 4.7 in 2020, compared to SAR 1.9 in 2019.

According to Itqan Capital, the “Buy” rating means that there is an upside potential of 20.3% in 52-week period.

In November, the insurer reported a net profit before Zakat of SAR 225.5 million for the first nine months of 2019, a rise of over threefold year-on-year (YoY).