[Click eStock] "Dongyang Life Insurance, Q3 Earnings Surprise Expected"

Hana Financial Investment "Dongyang Life Insurance Target Price Raised from 6,000 Won to 7,900 Won"

(Provided by Hana Financial Investment)

[Asia Economy Reporter Gong Byung-sun] It is anticipated that Dongyang Life Insurance will deliver an earnings surprise in its third-quarter results this year. This follows the realization of a gain from the disposal of its stake in Woori Financial Group.

On the 17th, Hana Financial Investment projected Dongyang Life Insurance’s third-quarter net profit to reach 88.6 billion KRW, a 293.9% increase compared to the same period last year. This figure surpasses the market consensus estimate of 86.4 billion KRW by approximately 2.5%.

The improvement in secondary gains and losses is estimated to have contributed to the strong third-quarter performance. In July this year, Dongyang Life Insurance disposed of 27.04 million shares of its stake in Woori Financial Group, valued at 301.5 billion KRW, through a block deal. A block deal refers to a transaction where a large volume of shares is traded between sellers and buyers after market hours. The expected gain from this sale is 52 billion KRW. Consequently, the investment yield for the third quarter is forecasted to increase to 3.6%, up 1 percentage point year-on-year and 0.7 percentage points quarter-on-quarter.

However, tertiary gains and losses are expected to decline by 37% year-on-year due to a base effect. Operating expense gains and losses are projected to show little change, with a 4% increase quarter-on-quarter and a 0.8% rise year-on-year, according to Hana Financial Investment’s analysis. This is because the average monthly insurance premiums at the beginning of the month for July and August, excluding bancassurance, are estimated to be 2.54 billion KRW, similar to the previous quarter. For these reasons, Hana Financial Investment has raised its full-year earnings forecast by 33.6% to 244.1 billion KRW.

Accordingly, Hana Financial Investment has upgraded its investment rating for Dongyang Life Insurance from ‘Neutral’ to ‘Buy’. The target stock price has also been raised from 6,000 KRW to 7,900 KRW. The closing price on the previous day was 6,810 KRW. Researcher Lee Hong-jae of Hana Financial Investment explained, “The increasing pressure of rising interest rates is a favorable factor,” adding, “Since it is not included in the KOSPI 200, it is currently excluded from short-selling targets.”

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