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Genworth’s stock market debut has won approval from investors thanks to its “solid earnings profile” and 45 per cent market share.
The LMI insurance giant debuted on Tuesday at $2.65 per share. Genworth finished its first day of trading at $3.00. The price faded yesterday to $2.95, but that still represented an 11.3 per cent increase on the initial listing price.
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Genworth reported a net profit of $179.2 million for the 12 months to 31 December 2013, a 9.4 per jump on the year before.
The company also wrote $596.5 million of premiums in 2013, which was 9.5 per cent higher than in 2012.
The rise in premiums was “mainly attributable to increased mortgage lending by customers owing to improved housing affordability as interest rates remained low in 2013”, it said.
Fairfax reported that part of the reason Genworth made such a strong debut on the stock market was that the shares were underpriced.
“Joint lead managers Goldman Sachs, CBA Equities, Macquarie Capital and UBS clearly priced the issue cheaply, which attracted solid demand,” Fairfax reported.
“The bankers recognised the Genworth story would be a hard sell, given the hot run in property prices had brought out the bears.
“But the believers were won over by the company’s solid earnings profile, fortified by an oligopolistic industry structure that delivers Genworth a 45 per cent share of the LMI market.”
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