Our opinion on the current state of MOMMET(MTM)Momentum Metropolitan (MTM) is an insurance company listed on the JSE and the Namibian Stock Exchange, formed by the merger of Momentum and Metropolitan in December 2010. The company operates across the full spectrum of short- and long-term insurance and financial services. Notably, Momentum Metropolitan was the first insurance company to achieve level 1 BBBEE status. The company has been scaling back its presence in certain African markets, closing its operations in Mozambique, Mauritius, Zambia, Tanzania, and Swaziland.
At the time of the merger, the combined company held 24% of the South African life insurance market, but this has since declined to 17%. During the first quarter of 2021, Momentum Metropolitan paid out nearly R4 billion in death claims, three times more than expected, largely due to the second wave of COVID-19. The company also announced plans to reduce its office space by 60%, as the work-from-home trend has continued since the pandemic.
In May 2023, it was announced that Jeanette Marais would succeed Hilgard Meyer as CEO on 30th September 2023. For the year ending 30th June 2024, the company reported headline earnings per share (HEPS) up 39% and a return on embedded value of 13.3%. Operating profit increased by 31%, from R2.755 billion to R3.608 billion, as many business units benefited from higher investment income and an elevated interest rate environment. However, Momentum Retail's operating profit declined, driven by lower market variances and increased expenses compared to the previous year.
Technically, the share began an upward trend in May 2024, and it was added to the Winning Shares List (WSL) on 24th July 2024 at 2402c. It has since risen to 2947c, with further upside potential expected. With a price-to-earnings (P/E) ratio of 9.87 and a dividend yield (DY) of 3.39%, Momentum Metropolitan looks reasonably priced, offering a solid investment opportunity for long-term growth.
