[Click eStock] "Aplus Asset, Full-Scale Profitability Improvement Next Year"

[Asia Economy Reporter Ji-hwan Park] Yuanta Securities stated on the 22nd that Aplus Asset is expected to see a recovery in operating revenue next year, signaling the beginning of a fundamental improvement trend.

Jeong Tae-jun, a researcher at Yuanta Securities, explained, "Aplus Asset has shown a decrease in operating profit from the first quarter compared to the same period last year due to the implementation of the first-year commission regulation earlier this year," adding, "The reason the first-year commission regulation leads to a decline in operating profit is that while new contracts and operating expenses remain unchanged, operating revenue decreases."

However, next year, entering the second year of the regulation and preparing for the introduction of IFRS17, competition in new contract sales, especially in non-life insurance, is expected to intensify, allowing quarterly operating revenue to recover to the 70 billion KRW range. Researcher Jeong Tae-jun stated, "Despite the decrease in operating revenue, maintaining operating expenses while the number of agents and retention rates are trending upward and the new contract market share remains stable is a positive sign."

As a long-term strategic direction, the company is pursuing a total life care platform that is not limited to insurance sales. The businesses currently operated by its consolidated subsidiaries are broadly divided into asset management, health care, and retirement care. Among these, funeral services, loan sales, and real estate contribute the most profit, and the management plans to gradually reduce dependence on insurance sales by fostering growth in other sectors. Researcher Jeong Tae-jun said, "The real estate sale profit in the third quarter is an example of this plan, as it is the amount recovered from the sale of real estate jointly invested by consolidated subsidiaries A+ Realty and A+ Life, allowing the company to enjoy portfolio effects in a challenging insurance sales environment."

The valuation (stock price level relative to earnings) is still considered lower than that of overseas general agencies (GA) . Despite demonstrating a higher ROE than the three overseas GAs used as comparables when calculating the IPO price, it still receives a relatively low valuation. At the time of listing in April last year, although the ROE was higher than comparable companies, it was listed at a discount to the average valuation, which explains why the stock price has seen the largest increase since then.

He added, "This year, ROE is expected to fall to the 20% range due to the decrease in operating revenue, but it remains higher than comparable companies and is expected to recover to the 30% range next year."