ALMATY, Kazakhstan - Credit ratings agency S&P Global Ratings has updated its outlook on several subsidiaries of financial services conglomerate Freedom Holding Corp. (NASDAQ: FRHC), according to a report published on June 28, 2024.
The outlook for Freedom Finance JSC, Freedom Finance Europe Ltd., Freedom Finance Global PLC, and Freedom Bank Kazakhstan JSC was revised to positive from negative, while the outlook for the parent company, Freedom Holding Corp., was adjusted to stable from negative.
The ratings for the subsidiaries were affirmed at 'B/B', with the parent company's rating remaining at 'B-'. This change reflects S&P's view of reduced economic risk and enhanced banking sector supervision in Kazakhstan, where Freedom Holding Corp. is headquartered and operates extensively. The agency anticipates Kazakhstan's GDP to grow by an average of 3.6% annually over the next four years.
S&P highlighted the company's strong capitalization, supported by robust earnings and a diversified revenue stream that now includes banking and insurance activities in Kazakhstan. The report mentions that Freedom Holding Corp.'s core earnings to S&P Global Ratings risk-weighted assets were stable at about 3.4% over the three years leading up to March 2024, which is considered a high risk-adjusted earnings ratio internationally.
The company's efforts to bolster its consolidated risk management framework since 2023 were also noted. The hiring of a chief risk officer, chief compliance officer, and chief legal officer, along with the expansion of its board of directors to include more independent members, were seen as positive steps towards strengthening risk governance.
The S&P report suggests that Freedom Holding Corp.'s operating subsidiaries could see a ratings upgrade within the next 12 months if the company continues to build on its risk management and compliance capabilities while maintaining strong capitalization and earnings.
Freedom Holding Corp. operates through its subsidiaries in 20 countries, providing a range of financial services including securities brokerage, investment banking, and commercial banking. Its common shares are traded on the Nasdaq Capital Market under the ticker FRHC.
The information in this article is based on a press release statement from Freedom Holding Corp.
In other recent news, Freedom Holding Corp. has made strategic changes to its board and executive team. The company announced the expansion of its board of directors and the creation of a chief legal officer (CLO) position, aiming to enhance corporate governance, risk management, and compliance capabilities. The board now includes Dr. Kairat Kelimbetov, Andrew Gamble, and Philippe Vogeleer, raising its membership to seven.
Jason Kerr, with 26 years of legal expertise, has been appointed as the new CLO. These recent developments are expected to significantly contribute to the company's long-term success, particularly as it continues to expand its business segments internationally, as expressed by Freedom Holding's CEO, Timur Turlov.
InvestingPro Insights
In light of the recent S&P outlook update on Freedom Holding Corp. (NASDAQ: FRHC), investors may find additional context through InvestingPro Tips and metrics. Despite the stable outlook, it's noteworthy that Freedom Holding Corp. is quickly burning through cash, which could be a potential red flag for investors. On the brighter side, the company is trading at a low P/E ratio relative to near-term earnings growth, suggesting that the stock might be undervalued given its earnings potential.
From a financial perspective, Freedom Holding Corp. boasts a market capitalization of $4.49 billion and a P/E ratio of 11.62, which aligns with the company's perceived undervaluation. The PEG ratio, which measures the stock's price relative to its earnings growth rate, stands at an attractive 0.15 for the last twelve months as of Q4 2024.
This suggests that the company's earnings growth is robust when compared to its share price. Furthermore, a remarkable revenue growth of 98.6% for the same period highlights the company's significant expansion, complementing the positive outlook provided by S&P.
Investors interested in deeper analysis can find additional InvestingPro Tips that examine Freedom Holding Corp.'s financial health and market position. There are currently six more tips available on InvestingPro, which can be accessed by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
These tips provide valuable insights into aspects such as the company's profitability over the last twelve months, its high return over the last decade, strong return over the last five years, and its decision not to pay dividends to shareholders.
With the company's shares trading at 72.48% of their 52-week high and an InvestingPro Fair Value estimation of $79.1, investors have a quantifiable perspective on the stock's current position relative to its perceived intrinsic value. As Freedom Holding Corp. continues to navigate the financial landscape, these InvestingPro insights can serve as a useful tool for investors making informed decisions.
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