[Click eStock] "Samsung Life Insurance, Poor Performance but Dividend Expectations Rise"

Expectations for Aggressive Dividends... DPS Forecasted at 4,600 Won

[Asia Economy Reporter Minwoo Lee] Samsung Life Insurance is expected to continue posting somewhat sluggish earnings. Nevertheless, given the significant possibility of rising interest rates and its aggressive shareholder-friendly policies so far, there is an analysis that it can be approached from the perspective of a dividend stock.

On the 27th, Shinhan Financial Investment maintained its investment opinion of 'Buy' on Samsung Life Insurance and a target price of 110,000 KRW. The closing price the previous day was 70,700 KRW.

This year's third-quarter earnings are expected to be an operating profit of 33.3 billion KRW and a net profit attributable to controlling shareholders of 238 billion KRW on a consolidated basis. These figures represent decreases of 71.3% and 24.8%, respectively, compared to the same period last year. The net profit attributable to controlling shareholders is also about 13.3% below the market consensus of 274.5 billion KRW.

Heeyeon Lim, a senior researcher at Shinhan Financial Investment, said, "The sensitivity to the KOSPI per 100 points is about 35 billion KRW, but as the KOSPI declined compared to the previous quarter, the reserve for variable insurance guarantees has increased," adding, "Due to the recent slowdown in the sales of protection-type insurance across the industry, the growth in risk premiums is limited to 3.7%, and the risk loss ratio is expected to continue rising to 90.3%."

The fourth quarter is also expected to be somewhat sluggish. Operating profit on a consolidated basis is forecasted at 39.7 billion KRW, and net profit attributable to controlling shareholders at 242.7 billion KRW. These are expected to decrease by 76.5% and 10.3%, respectively, compared to the same period last year. Due to the reversal of reserves for variable insurance guarantees following the rise in the 5-year government bond yield since the end of September last year, variable insurance profits and losses are expected to show a stable trend. However, the risk loss ratio is expected to worsen by 14.2 percentage points to 91.1%, leading to a decline in profits compared to the previous year. Researcher Lim explained, "If stock market volatility increases within the quarter, variable insurance profits and losses will also fluctuate, so earnings estimates may be revised later."

Nevertheless, its appeal as a dividend stock is expected to be highlighted. Researcher Lim said, "The fact that Chairman Lee Seo-hyun has entered into a disposal trust for half of her 1.73% stake is a factor limiting short-term stock price increases," but added, "However, amid expectations of rising interest rates, interest in dividend stocks will likely increase toward the end of the year. Considering its aggressive shareholder-friendly policies, such as pursuing a 50% dividend payout ratio, this year's dividend per share is estimated at 4,600 KRW, with an expected dividend yield of 6.5%."

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