[Click eStock] "Hyundai Marine & Fire, Lowest Loss Ratio in 3 Years... Target Price Up 7%"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities maintained a 'Buy' rating on Hyundai Marine & Fire Insurance on the 1st, stating that the profitability improvement trend continues, and raised the target price by 6.7% from the previous 30,000 KRW to 32,000 KRW.

Jeon Baeseung, a researcher at Ebest Investment & Securities, said, "Strong earnings are expected in the second quarter as well," adding, "The estimated net profit for the second quarter this year is 123.7 billion KRW, exceeding market expectations and continuing the strong earnings trend." The loss ratio fell to 83.3%, the lowest level since the second quarter of 2018, which is expected to drive earnings improvement. The combined ratio is also expected to decrease by 1.4 percentage points year-on-year to 103.5%.

Although investment operating profit will decrease to the level of the second quarter of last year due to reduced gains on disposals, it is expected that the annualized return on equity (ROE) will exceed 10%, demonstrating high profitability following the first quarter.

In particular, significant profit growth is expected this year. The downward trend in the automobile insurance loss ratio is expected to continue, falling below 80% during the second quarter. Although an increase in automobile loss amounts is anticipated in the second half of the year, the positive effects of various regulatory changes are becoming visible, so the rise is expected to be limited. The long-term risk loss ratio is expected to rise by 4.7 percentage points year-on-year to 96.2% in the second quarter, reflecting the concentrated COVID-19 rebound benefits in the previous year, but a slight decline is expected compared to the first quarter. Researcher Jeon Baeseung explained, "If discussions on simplifying claims for indemnity insurance progress in the future, positive effects are expected for the company, which has a high indemnity loss ratio." The expected net profit for this year is 397.6 billion KRW, forecasting a significant 30% profit growth compared to last year.

Researcher Jeon evaluated, "The price-to-book ratio (PBR) is around 0.5 times, indicating that the current stock price is undervalued relative to expected profitability, and "the dividend yield is also expected to reach 5%, showing high dividend attractiveness."

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