Thursday, 7 May 2020

Analysis of Talanx 2020

Logo of Talanx 2018

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.

P/E: 9.1

Here you can find the previous Analysis of Talanx 2018

The P/E of Talanx is looking good with 9.1 and the P/B is also good with 0.8 which gives us a go from Graham. The earnings to sales are very low with only 2% and the ROE could be better since it is only at 9.1%. The book to debt ratio is ok with 0.7.

In the last five year they have had a yearly "revenue" growth rate of 4.4% which corresponds to a motivated P/E of 13 to 16 which means that Talanx is today undervalued by the market.

They pay an acceptable dividend of 4.5% which correspond to 41% of their earnings which is fully acceptable.

Future: Insurances will exist for a long time in the future. Based on how aggressive the companies are in their sales approach and creativity in what they insure they do however have a chance to bubble and burst. Talanx is owned to 79% of a German industrial non-profit affiliation. I never did manage to get a response on what they did with the dividends they received but my conclusion was that being a non-profit organisation they will hopefully make sure we do not see any bubbles and bursts.

Conclusion: Graham gives an ok and I am happy with the shares that I currently hold but I will not increase my holding any further.

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