a.s.r. share price and Graham Value

Jos Baeten Chairman and CEO "a.s.r. is one of the larger private real estate investors in the middle segment of (rental) homes. We are therefore following the government's plans for the housing market with interest. There is sufficient capital available in the Netherlands to finance the construction of new homes and there is ample willingness amongst investors, but the investment must be financially feasible. Plans to regulate rents in the mid-market segment will discourage this."

...we are announcing today that we are investing in a new project by SemperPower, who is building the largest battery energy storage system in the Netherlands. By doing so, we contribute to a faster integration of sustainable energy in the Dutch electricity market. 

Combined ratio The combined ratio of P&C and Disability remained stable at 91.7%, which was better than the target range of 93-95%

a.s.r. is merging with Aegon Nederland. Shares are increasing from 148m to around 210m to "pay" for this (EUR 2,6b) as well as as EUR 1b loan and EUR 0,6b extra placement of shares.   

Earnings and equity go up and down with the financial markets. The operating result per share may be better? (Below Earnings per Share are used.) As well as 1x book value instead of 1,5x book value? 

Benjamin Graham Defensive Analysis:

SECTOR: [FAIL] ASR is an insurance company and therefore this methodology is not applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. ASR's sales of €6 041 million, based on 2022 sales, pass this test.

CURRENT RATIO:  not applicable. 

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS:  not applicable. 

LONG-TERM EPS GROWTH: [FAIL] [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. ASR does not have a long enough track record as an independent company. The IPO was in 2016.

EARNINGS YIELD: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. ASR's E/P of 12% (using last years earnings) passes this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. ASR has a Graham number of √(15 x €5,4 EPS x 1,5 x €46 Book Value) = €75 and passes this test.

DIVIDEND €2,7/€42.4 = 6 %

Conclusion: 2019, 2020 and 2022: ASR Nederland still seems priced well below intrinsic value with a margin of safety at the moment.