AI insurance acquisition offers big upside potential for diversifying BGM

The company plans to purchase Duxiaobao, an AI insurance platform developed in cooperation with Baidu and AIX Inc.

By Rucha Gupda

Today, I would like to share a stock analysis about BGM Group Ltd. (BGM.US), whose recent acquisition and strategic layout have revealed its tremendous potential in the AI insurance sector. BGM is a global pharmaceutical and chemical company, and its diversified investment strategy has helped it delve into several emerging markets. The company is planning to acquire Duxiaobao, an AI insurance platform developed in cooperation with Baidu (BIDU.US; 9888.HK) and AIX Inc（AIFU.US).

Duxiaobao utilizes big data and AI technology to offer personalized insurance analysis services. Through this acquisition, BGM will integrate Baidu’s and AIX’s extensive big data models, which include vast customer profiles and target customer models, effectively revolutionizing the insurance sales approach by replacing traditional insurance brokers with customized solutions while also ensuring customer privacy and security.

AIX has nearly 5 million sales personnel, 16.9 million reachable clients and 17.6 million client households. Baidu has 704 million monthly active users. 

The AI insurance landscape

The global AI insurance market is rapidly expanding, and BGM is positioned at the forefront of this emerging industry through the acquisition of Duxiaobao. AI technology will provide BGM with a strong competitive advantage, particularly in personalized insurance products and claims efficiency. In the future, BGM may emerge as a leader in the AI insurance field.

We can compare BGM to Prudential Plc (PUK.US), with a market cap of approximately $21.7 billion, and Prudential Financial (PRU.US), valued at around $46.1 billion, both of which primarily focus on traditional insurance products. By comparison, BGM harnesses AI-driven solutions supported by Baidu’s big data to effectively reduce costs, expand market share, and enhance customer satisfaction, positioning it to disrupt conventional insurance business models.

Prudential Financial has matured in its AI applications, with its valuation growth relying more on market expansion and service penetration rates, while BGM is at the nascent stage of a technological revolution, boasting stronger potential for growth through AI empowerment. With the launch of the Duxiaobao platform, BGM is expected to demonstrate advantages in precision underwriting and personalized services, leading to a geometric increase in its customer base. Currently, BGM’s total customer count stands at 16.8 million, with near-term potential to surpass Prudential Financial, which currently reports a customer count of 18 million.

Baidu’s AI technology support is a unique advantage for BGM. Compared with Prudential Financial, Baidu’s technological capabilities and data ecosystem are more localized and focused on high-growth markets such as the Chinese insurance market. This synergy is anticipated to significantly boost BGM’s valuation over the next three years.

BGM’s valuation is currently significantly lower than its peers, indicating that the market has yet to fully recognize its future growth potential. As BGM strengthens its foothold in the AI insurance sector, its performance is expected to grow significantly, leading to a rise in valuation and stock price, which would be positively influenced.

BGM’s stock price potential

Through the acquisition of Duxiaobao, BGM has entered the AI insurance market, and this innovative strategy will drive the company’s future performance, supporting an increase in its stock price. Compared to Prudential Plc and Prudential Financial, BGM’s lower valuation suggests that the market has yet to recognize BGM’s growth potential fully, indicating significant upside potential. And with the rapid expansion of the AI insurance market, BGM stands to benefit from the industry’s swift development and gain additional market share.

In summary, BGM’s stock is currently undervalued, and as its AI insurance business expands, there is potential for significant valuation growth. Therefore, for those of us who favor innovation-driven growth opportunities, BGM undoubtedly stands out as a star stock in the insurance industry.

Rucha Gupda is an analyst at Magpie news. You can reach him at info@magpienews.com

This commentary is the view of the writer and does not necessarily reflect the views of Bamboo Works

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