Prudential continues to impress, even though shares still fail to reflect its buoyant Asia and US prospects. Richard Hunter, head of markets at interactive investor, goes through today's half-year numbers.
Further meat on the bone regarding the M&G Prudential demerger, along with satisfying progress across the piece, have helped nudge Prudential shares higher following half-year results today.
The UK & Europe, which accounts for 23% of sales, has put in a decent performance given the backdrop of an increasing need for self-help in terms of UK savers.
Meanwhile, the US business (25% of sales) has also performed strongly, boosted by an economy currently firing on all cylinders and again underpinned by the needs of the baby boomers.
It is Asia, though, where the majority of growth prospects lie. Not only does the region currently account for 52% of sales, the company now has access to 70% of the Chinese population - some 1 billion people - where its "health and wealth" offering continues to gain traction.
Meanwhile, cash generation remains high, the group’s financial position is in rude health and a 9% increase in group operating profit for the period may have dumbfounded some.
An increase to the dividend signals management confidence in prospects, although a projected yield of just under 3% is not a particular attraction.
The major risks facing Prudential are not necessarily of its own making, namely investment performance where certain markets are starting to look stretched on a valuation basis, a political landscape which is lurching towards protectionism and the ongoing costs and overhang of regulation.
In addition, currency headwinds are in focus, while the demerger will prove a complex undertaking and will inevitably become something of a distraction for the group as the time approaches.
One particular disappointment has been the performance of the shares, where the initially positive reaction to the demerger plans has evaporated.
The shares have fallen 2% over the last six months and have dropped 6% over the last year, during which time the wider FTSE 100 has added 2.5%.
This contrasts sharply with the general view of the shares at the moment, with the mere possibility of Prudential being able to capitalise and concentrate on its strongly growing Asian and US businesses enough to maintain the consensus of the shares at a strong buy.
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