[Click eStock] Mirae Asset Life Insurance, Target Price 'Raised' · Short-Term Rise Poses Burden

NH Investment & Securities announced on the 19th that it maintains a Hold rating on Mirae Asset Life Insurance but raises the target price from 3,400 KRW to 4,300 KRW. The previous closing price was 4,640 KRW.

Researcher Jeong Jun-seop noted, "Mirae Asset Life Insurance's stock price is expected to strengthen due to the IFRS17 transition effect, the major shareholder's equity purchase, and dividend expectations for life insurance stocks; however, there is pressure from the short-term stock price increase."

The discount rate used in calculating the target price was adjusted from the previous 70% to 60%, aligning with competitors' levels. The target price's applied book value per share (BPS) was changed from 2023 to 2024. However, earnings estimates were revised downward due to adjustments in investment gains and CSM outlook. Researcher Jeong explained, "We maintain the Hold rating reflecting the gap between the target price and the current stock price. The relatively low debt burden, strong K-ICS ratio, and improved supply-demand from the major shareholder's continuous equity purchases are positive factors, but these are already priced into the current stock price."

With the entry into the IFRS17 system, the life and non-life insurance industries are actively securing CSM through new contract sales, but Mirae Asset Life Insurance is somewhat lagging. In the first half of 2023, Mirae Asset Life Insurance's APE was only 120.6 billion KRW (-32.3%). Researcher Jeong said, "While it is understandable that the main product, variable investment-type, is market-dependent, improvement seems necessary as continuous CSM creation is required under IFRS17."

It was also seen as a timely moment to consider a proactive shareholder return policy. Based on the amendment of the Commercial Act, Mirae Asset Life Insurance's estimated distributable profit (323 billion KRW) exceeds the annual net profit, so it is analyzed that there will be no obstacles to shareholder returns. Researcher Jeong pointed out, "Along with dividend payments, using treasury shares held could also be considered."