Prudential growing with strong first half results, switch to TEV By Investing.com

Investing.com — Shares of Prudential (LON: ) rose on Wednesday after reporting its H1 results, which beat expectations in several key areas.

At 4:08am (0808 GMT), Prudential was trading 2.2% higher at £676.80.

Analysts at Jefferies, JP Morgan and Morgan Stanley pointed to the company’s strong performance and strategic shift to Traditional Embedded Value (TEV) reporting as major contributors to the positive market reaction.

Prudential reported EPS of $3,027 million, which was 1.5% below consensus. However, despite this slight miss, emerging markets saw strong sales momentum, with growth of 30% in constant currency terms.

However, sales in Hong Kong fell 7%, showing a deceleration from growth in the previous quarter. Management saw an increase in the pace of sales in June, which is expected to continue in the second half of the year, according to analysts at Jefferies.

NBP beat consensus by 1% and JP Morgan estimates by 5%. NBP’s margin of 47.2% exceeded the consensus margin of 46.1% and was 2.5 percentage points above JP Morgan’s estimate.

This improvement was driven by better pricing and product mix, although country and channel mix challenges remained, JP Morgan analysts said.

On a constant currency basis, Prudential’s gross OFSG fell 4% year-over-year to $1.35 billion. Morgan Stanley and Jefferies report that this result was in line with consensus expectations, but that the drop in new business sales during the COVID period continued to be a drag on results.

The company reported IFRS operating profit of $1.54 billion, which was 3% above consensus estimates. This was driven by positive results in the life and asset management segments, with contractual service margin (CSM) growth of 9%, slightly above guidance, according to analysts at Morgan Stanley.

Prudential will switch from European Embedded Value (EEV) to Traditional Embedded Value (TEV) reporting in the first quarter of FY25. This change is expected to improve comparability with key peers and has been well received by investors.

According to TEV’s reporting, Prudential will reset its new business profit to $1.7 billion, with a revised 2027 target range of $3.4-4.2 billion, as reported by JP Morgan.