Dividend windfall for LPI Capital shareholders

PETALING JAYA: LPI Capital Bhd is expected to distribute around RM737mil of special dividends to shareholders in the financial year ending Dec 31, 2026 (FY26) and FY27 after the sale of the company’s entire 1.13% stake in Public Bank, BIMB Research says.

The company successfully divested its 220.3 million shares in Public Bank on May 21, 2026, for gross proceeds of RM1.05bil, with 70.17% of sale proceeds set to be disbursed as special dividend payments progressively over 18 months from the date of receipt.

After revising its assumptions, the research house anticipates that approximately 75% of the 186 sen special dividends arising from the disposal will be distributed in FY26, with the remainder paid in FY27.

Moreover, the shares were sold to local and foreign institutional investors at RM4.75 per share.

The divestment also fulfilled regulatory requirements, as LPI Capital, a Public Bank subsidiary, cannot hold shares in the bank.

Meanwhile, 29.37% of the sale proceeds, or RM308mil, has been allocated for reinvestment in a securities portfolio, with about RM100mil already deployed into two listed banking stocks to secure dividend yields, according to BIMB Research.

It said the company’s near-term investment income would likely moderate in the second half of FY26 (2H26), given that RM208mil of unallocated funds are in lower-yielding fixed deposits pending deployment into blue-chip dividend-paying stocks.

For the second quarter of FY26, the research house expects decent earnings for the company on the back of improved premium growth, supported by stronger cross-selling opportunities through Public Bank’s small and medium enterprise network and demand for personal accident products.

However, gains may be partially offset by a quarter-on-quarter rise in fire claims, it said.

“Claims are expected to remain elevated, underpinned by climate-related risks, inflation in medical costs and motor spare parts, as well as larger court-awarded compensation for bodily injury claims under motor insurance,” it added.

LPI Capital is also currently assessing participation in the sale of value-based medical and health insurance/takaful products and is preparing for Phase 2B of the insurance de-tariffication for the fire and motor liberalisation framework, targeted for completion by 2027.

BIMB Research noted that the ongoing transition from Phase 2A to Phase 2B should sustain a competitive pricing environment among these segments.

The research house has trimmed its FY26 earnings estimates for LPI Capital by 1.3% to reflect lower investment income expected in 2H26.

It also revised down its fair value for the stock to RM14.50 from RM14.75 previously, based on a lower FY27 price-to-book value of 3.2 times.