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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] On October 20, DB Financial Investment projected that Hyundai Marine & Fire Insurance might not issue dividends this year due to increased comprehensive losses from falling interest rates and a rise in reserves for surrender refunds.
Consequently, the firm lowered its target price from KRW 42,800 to KRW 26,900 and downgraded its investment rating from "Buy" to "Neutral." Hyundai Marine & Fire Insurance's stock closed at KRW 26,600 on the previous trading day.
DB Financial Investment expressed concerns that the company's key financial soundness indicator, the New Risk-Based Capital (K-ICS) ratio, could fall to around 150% by the end of the year. The firm also anticipated that Hyundai Marine might consider issuing subordinated bonds early next year. Factors such as a nearly 30-basis-point drop in the 10-year government bond yield since the end of September and the strengthening of actuarial assumptions for no-surrender products are expected to weigh on the company's financials.
Lee Byung-geon, a researcher at DB Financial Investment, commented, "Dividend expectations are unlikely in the near term. The absence of dividends renders the previous target valuation meaningless. As such, we have applied the price-to-book ratio (PBR) bottom level of major banks, 0.4x, to revise our target price to KRW 26,900 and downgrade our investment opinion to 'Neutral.'"
While there is potential for regulatory easing in the future, the company may face challenges resuming dividend payments for two to three years post-2025 unless there are significant changes to the current regulatory direction.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
