DB Insurance Purchases Over 160,000 Additional Shares
Improved Net Profit from Increased Actual Loss Insurance Premiums
Hyundai Construction Purchases 72,487 Shares
Expecting Accelerated Growth in Housing Sales
[Asia Economy Reporter Park Jihwan] Since the beginning of the new year, the National Pension Service has added shares of DB Insurance and Hyundai Construction to its portfolio among major holdings. The choice is attributed to expectations of continued performance improvements due to interest rate and indemnity insurance premium hikes, and benefits from expanded housing supply ahead of the presidential election, respectively.
According to financial information provider FnGuide on the 14th, the National Pension Service increased its holdings in DB Insurance and Hyundai Construction, both of which it owns more than 5% of shares in, since the start of this year. On the 10th, the National Pension Service purchased an additional 164,444 common shares (0.23%) of DB Insurance, raising its total holdings to 7,149,003 shares (10.10%). For Hyundai Construction, it newly acquired 72,487 common shares (0.06%), increasing its total holdings to 11,162,596 shares (10.02%). Both companies are expected to deliver strong earnings this year as various market indicators and policy environments directly linked to profitability are unfolding more positively than ever.
DB Insurance’s standalone net profit for the fourth quarter of last year is forecasted to increase by 89.5% year-on-year to 114.1 billion KRW. This follows an ‘earnings surprise’ in the third quarter of last year. Park Hyejin, a researcher at Daishin Securities, said, "The average indemnity insurance premium increase rate this year is 14.2%, the highest in the past four years," adding, "Due to the premium hikes, the net profit of the non-life insurance industry is expected to improve by 2-3% compared to initial estimates."
The rising government bond yields are also a positive factor. Insurance companies invest the premiums they receive from customers in bonds and other securities, so they are a representative sector that benefits from higher profits during periods of rising interest rates. Recently, the U.S. 10-year Treasury yield rose to the 1.7% range at one point, marking the highest level since November last year. With the Bank of Korea raising the base interest rate from 1.0% to 1.25% on the same day, domestic government bond yields are also expected to continue their upward trend.
Hyundai Construction has been selected as the top preferred stock within the construction sector by Hanwha Investment & Securities, NH Investment & Securities, Yuanta Securities, and Daishin Securities since the beginning of this year. This is due to clear expectations of performance improvements driven by the presidential election momentum, housing pre-sales, and expansion of overseas orders. Rajinseong, a researcher at KTB Investment & Securities, said, "Hyundai Construction is expected to achieve significant performance improvements starting this year due to accelerated growth in housing sales and a turnaround in overseas operations," adding, "In the fourth quarter of last year alone, overseas sales on a standalone basis are expected to reach 1 trillion KRW for the first time since 2018."
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