[Click eStock] "DB Insurance, Stock Price Lagging Behind Earnings is Nonsense"

[Asia Economy Reporter Park Jihwan] Cape Investment & Securities evaluated DB Insurance as having recorded an earnings surprise in the second quarter on the 13th, stating that the current stock price is in a nonsensical situation where it does not keep up with the performance. Accordingly, they maintained a 'Buy' investment rating and raised the target price by 16.7% from the previous 60,000 KRW to 70,000 KRW.

Researcher Kim Doha of Cape Investment & Securities said, "DB Insurance's second-quarter net profit was 211.9 billion KRW, marking an earnings surprise," and added, "Attention should be paid to the simultaneous improvement in automobile insurance profitability and the decline in expense ratio." Even after raising the estimated loss amount considering seasonal disaster losses and an increase in quarterly claims in the third quarter, the analysis shows that it still does not match the rapidly increasing insurance premiums.

DB Insurance is showing an improvement in loss ratio due to strong insurance premium growth and a decline in loss amount growth rate. In particular, the long-term risk loss ratio decreased by 0.6 percentage points year-on-year to 90.4%, marking a decline for the first time in seven quarters.

Researcher Kim Doha explained, "The automobile flood damage caused by heavy rains in July and August is estimated to be in the low 10 billion KRW range," and added, "Although the third-quarter loss amount was raised by 30 billion KRW compared to the previous estimate considering seasonal disasters and an increase in quarterly claims, the higher-than-expected insurance premium income has a greater impact."

He emphasized, "Due to the strong performance this quarter and changes in assumptions from steady sales growth, the expected investment return on equity (ROE) for the next three years is raised by 0.7 percentage points."

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