Bao Long Insurance recorded VND48 billion in Q3 pre-tax profit but negative cash flows from business activities

28-Oct-2020 Intellasia | Tai chinh va Cuoc song | 6:02 AM Print This Post

In the third quarter (Q3) of 2020, the insurance business activities of Bao Long Insurance Joint Stock Corporation (stock code on the Unlisted Public Company Market (UPCoM): BLI) did not record much change compared to the same period of last year. However, thanks to the reversal of the provisions for securities price reduction provisions, the company recorded a pre-tax profit growth of 14%, reaching more than 48 billion dong.

The Q3 insurance premium revenue was more than 321 billion dong, up by 10 percent over the same period of last year. However, the reinsurance ceding fee in Q3 rose by 19 percent compared to the same period of last year, leading to a modest growth of only three percent in the quarter, reaching nearly 230 billion dong.

In addition, the total operating costs in insurance business of BLI increased by two percent to nearly 162 billion dong, mainly including compensation costs (57 billion dong) and insurance commission expenses and other costs (103 billion dong).

As a result, the gross profit from insurance business activities of BLI rose by six percent to nearly 68 billion dong. The gross profit margin inched up from 29 percent to 30%.

Regarding financial activities, BLI recorded financial activity revenue of more than 25 billion dong in Q3, up by two percent over the same period of last year. At the same time, BLI received a reversal of more than five billion dong of provisions for securities price reduction which were set aside in Q1 2020. This led to a Q3 profit from financial activities of more than 30 billion dong, up by 24 percent over the same period of last year.

Although the net revenue from insurance business activities of BLI increased at a low level, the increase in revenue from financial activities was significant, BLI’s pre-tax profit grew by 14 percent to more than 48 billion dong. The company’s after-tax profit was more than 38 billion dong, up by 15 percent over the same period of 2020.

In general, after the first three quarters of 2020, BLI attained a total pre-tax profit of more than 107 billion dong, down by 17 percent over the same period, due to the respectively increase of 19 percent and 32 percent in financial expenses and business management expenses.

In 2020, BLI targets to achieve 74 billion dong in gross profit from insurance business, up by 12%, while its pre-tax profit is expected to decrease by 24 percent to nearly 40 billion dong.

Compared to this plan, BLI has exceeded 188 percent of its gross profit target in insurance business and exceeded 168 percent of the pre-tax profit.

In the first nine months of 2020, the net cash flows from business activities of BLI were in a negative status of nearly 25 billion dong, while it was a positive 25 billion dong in the same period of last year. the main reason is the sharp rise in spending on insurance business activities.

As of September 30th 2020, the assets of BLI did not see major changes and were still nearly 2.051 trillion dong, up by three percent compared to the beginning of the year. In particular, the strongest decline was recorded in cash and cash equivalents (negative 74%).

BLI’s liabilities were similar to what was recorded at the beginning of the year, accounting for 65 percent of the total capital, mainly located in the provisions for professional activities of nearly 920 billion dong.

In the stock market, after skyrocketing to 9,300 dong per share in mid-2020, BLI’s stock price dropped to 7,000 dong per share at the end of the session on October 23rd 2020, down by 25%. The stock liquidity is relatively low at only 1,887 share per day in nearly the last 11 months.

 

Category: Finance, Vietnam

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