Here we have a “classic damage case,” as Kostas Tsakounas used to say. The board cannot price a company worth more than €6.50 for just €3.95 or a staggering -40% discount. And remember, she does not owe a dime, while in the last 20 years her assets have increased more than a thousand times starting in 2002 at 21 million euros and now she has left behind 278 million euros. We’re talking about Interlife (INLIF)-listed Diamond Insurance which, no matter how much you dig into its financials, you won’t find a single flaw.
The only listed insurance company since the former comrade on the board of the European Credit Exchange came one day and was snapped up by the German Allianz at a price of 7.80 euros per share or 207 million euros, much more than her net worth. It’s like saying a big global insurance organization comes and buys Interlife for 7€ and gives an instant profit of +77%. We say of course, although the truth is that what foreigners see and thirst for is that the Greek insurance market has scope in the coming years to triple until it reaches the EU average slightly. But beyond the possible surprise takeover of ‘Bride’, let’s see in more detail why Interlife is currently a standout choice.
The first and most basic fact is that it has a net worth of 113.33 million euros which gives a price of 6.10 euros per share while as everything shows in 2023, Interlife will regain what it lost in 2022 due to the increasing market volatility. So far, figures show that the company’s net worth will exceed the 121.9 million euros it had in 2021, or a price of 6.57 euros per share.
The second data comes from the statement of President and CEO Mr. Ioannis Phoutsaridis that in the first quarter of 2023, the company has already recovered the loss it wrote last year. This means that the company started with positive earnings of €6.4m, which gives significant points for showing better after-tax results than 2021 results of €14.46m.
The third fact is that the company showed last year in its financial year a loss of 18.64 million euros from the valuation of the financial portfolio. Keep in mind not who sold it but who valued it at the time. A portfolio that includes bonds of up to ten years. Of course, this portfolio will also return to a positive position, as it matures, it will also increase profitability. However, in terms of actual sales of financial assets from those that “go” in cash, and not “hypothetical” valuations over time, the company brought profits to its shareholders in the amount of 4.825 million euros.
The money the company has collected from rents by renting out what it owns also goes to the fund. In other words, zero property with no tenant. Did you know that Interlife also has three hotels in Rhodes where they rent it out? Therefore, in the real estate sector, the company has put in the fund for the year 2022 the amount of 825.7 thousand euros, which is in fact + 38% more than the 598 thousand euros for the year 2021.
The fourth element is the historical path of Interlife’s greatness, which gives more guarantees for its future. So we have and we say. Equity has quadrupled in the last decade and from 27.9 million euros in 2012 we hope it will reach 113.33 million euros, although we note that in 2023 it will exceed 121.9 million euros in 2021. The average growth in equity is +10.42 per year While the average return on equity is 11.71%. And if it is a well-prepared financial “machine”, then it will not have such a long-term annual return. At the same time, investments in the past decade have tripled and jumped from 83 million euros to 250 million euros and are still rising. Here is a bright field of glory as the total investments managed by insurance companies in Greece amount to €21 billion.
The fifth element is the fact that the company has no debts since its inception in 1991 until today. Its net fund at the end of 2022 amounted to 33 million euros, with more than 43 million euros in the form of immediately liquidable interest-bearing bonds of the Greek state. In other words, it has immediate cash in excess of its €73m board capital. With such financial strength, an aggressive takeover could easily be accepted as a “bride.”
Interlife’s income is the sixth component of the €79.46m it held in 2022 and the €70.93m it held in 2021 will be in line with management’s target of €90m, which significantly lifts net profitability and equity. . So a higher price on the net worth of the stock and of course, a higher price on the overvaluation on the board. Really, where will the “bride” antagonist go? Just don’t let the “groom” come along and offer what he’s really worth and we’ll wonder afterward… how come we didn’t take him for granted. So we ran back and forth from the European Pistisi and got +3 to +5% at the same time that it’s been trading for an extended period of time with a huge discount to its net worth. However, it is smaller than what Interlife has today.
The Seventh Element may prove to be Interlife’s greatest asset. In the coming years, the insurance market is expected to develop as one of the fastest growing, significantly increasing growth figures to approach the European Union average. For example I can bring up the home insurance industry. In Greece so far only 16% of homes are insured against natural disasters. We’re talking about a rate that could easily double and triple, especially after the government announced a 10% discount on ENFIA. At the same time imagine the home insurance rate in the European Union is as high as 75% to 85%. Like it or not, climate change and natural phenomena will make it necessary to increase home insurance.
Finally, we turn to two schematic analyses. One is medium-term with a 2-week chart and the other is short-term with a 2-day price chart.
In the medium-term analysis, we see an upward breakdown of the very strong bearish pressure ‘Q’ axis at €3.72 to €3.66. It is the pivot of resistance that hit the stock for more than 470 days. The stock’s immediate target is to cross above the €4.20 area where Vwap forms for 880 days, i.e. all of its trading on the Greek Stock Exchange. Above that the way is open for 5€, as it had made a local high before the start of the Russia-Ukrainian conflict. The price, which closed yesterday at 3.95€ in an unimaginable lag both in connection with the strong upward movement of the market and of course the net value of 6.10€. Volatility from 5 to 5.62 euros. Strong recovery in transaction volume.
Finally, in the short-term analysis, the majority of the technical indicators that appear give approval for the start of an upward movement. From the simple Relative Strength Index (RSI) and its moving average to the more complex technical Lorentzian indicator with fixed volume and MADC-Filtered.
* Apostolos Manthos is responsible for technical analysis and investment strategy.
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