[Click eStock] "Hanwha Life, Another Difficult Year Ahead... Target Price Down 16%"

[Asia Economy Reporter Park Jihwan] Hi Investment & Securities stated on the 21st that Hanwha Life still faces difficult challenges this year, presenting a 'Neutral' investment opinion and lowering the target stock price by 16% from the previous 2,500 KRW to 2,100 KRW.

Researcher Kang Seunggeon of Hi Investment & Securities analyzed, "The standalone net profit in 2019 was 114.6 billion KRW, a 68.1% decrease compared to the previous year," adding, "This was due to impairment losses sustained throughout the year, an additional 341 billion KRW reserve for variable guarantees reflected in the fourth quarter, and a decrease in insurance profits caused by worsening margin on surplus."

Researcher Kang explained, "This year, asset management will inevitably need to focus on long-term bonds," and added, "Realizing disposal gains and purchasing long-term bonds are expected to act as a burden due to the decline in the cost of liabilities."

The earnings outlook was also viewed negatively. Hanwha Life's standalone net profit for this year is forecasted at 193.5 billion KRW, a 19.2% downward revision from the previous forecast. This is because the base effect of impairment losses is largely offset by the base effect of disposal gains, and the burden of negative spread due to the decline in the cost of liabilities has been reflected.

Additionally, the relaxation of the Liability Adequacy Test (LAT) calculation standards increased LAT surplus, thereby reducing concerns about deficits. However, this is evaluated as a reduction in solvency uncertainty, not an increase in shareholder value.

Researcher Kang diagnosed, "The difficult challenges of expanding asset duration and defending the cost of liabilities remain burdensome factors this year."

This content was produced with the assistance of AI translation services.