Thursday, April 16, 2015

Analysis of Talanx 2015


Talanx, a German mutual holding insurance company

Company: Talanx

ISIN DE000TLX1005 | WKN TLX100  

Business: A German mutual holding insurance company. It is divided into five divisions: Industrial Lines (covering all the insurance needs of industrial companies), Retail Germany (retail and commercial customers covering property/casualty), Retail International (outside of Germany), Reinsurance (non-life reinsurance via especially Hannover Rückversicherung that Talanx own to 50.2%) and finally Financial Services (an internal reinsurance part for the entire group).  

Active: In over 150 countries however Germany stands for over 50% of revenue. With focus on Poland, Turkey and Chile they try to change this.

P/E: 10.2

Here you can find the previous analysis of Talanx 2014

contrarian values of P/E, P/B, ROE as well as dividend for Talanx

The P/E for Talanx is great with 10.2 and the P/B is also excellent with 0.6! The rule says that a mutual holding insurance company traded below P/B of 1 is beneficial to shareholders and when above 1 to the customers. Graham gives is ok signal on this one! The earnings to sales are so, so with 3% but the ROE is bad with only 6%! The book to debt ratio with 0.1 is also not uplifting but still it is an improvement since last year.
In the last five years they have managed to have a yearly revenue growth of 5% which is excellent and it gives us a motivated P/E of 16 to 19 which means that Talanx is undervalued by the market.
They pay a very nice dividend of 4% which correspond to 41% of their earnings to there is still room to increase also with flat earnings.

Conclusion: Graham says yes to this company and so do I. The P/E, P/B and dividend are excellent and the only bad thing is the ROE. I am however already a shareholder in Talanx and I currently see no reason to increase my holding as long as I see other interesting things to buy.

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