Hana Securities announced on the 23rd that it is initiating coverage on Hanwha General Insurance with a 'Buy' investment rating and a target price of 6,000 KRW.
Youngjun Ahn, a researcher at Hana Securities, explained, "The target price was derived using the dividend discount model, and given the shareholder return policy announcing a sustained annual increase of around 10% in dividends per share (DPS) over the next three years, the expected DPS for 2024 is 220 KRW, with a dividend growth rate of 10%. The required rate of return was set at 13.4% using the Capital Asset Pricing Model (CAPM)."
Hana Securities highlighted the investment points for Hanwha General Insurance as follows: △ a dividend turnaround and significant improvement in previously undervalued factors such as high volatility in insurance profits and concerns over capital ratio deterioration, △ stable new contract growth, and △ the most advanced shareholder return policy in the industry based on DPS.
Researcher Youngjun Ahn stated, "The expected annual net profit for 2024 is projected to increase by 11% year-on-year to 322.1 billion KRW," adding, "Based on stable new contract growth and relatively favorable year-end insurance contract margin (CSM) adjustments, the year-end CSM balance is expected to grow by 7% compared to the previous year-end, reaching 4.2 trillion KRW."
He assessed that the current stock price is undervalued. Researcher Youngjun Ahn said, "The current stock price is extremely undervalued with a price-to-book ratio (P/B) around 0.1 times and a price-to-earnings ratio (P/E) around 1 time, but we can expect valuation expansion as stable earnings continue. Although transitional measures and capital ratios are burdensome factors, specific shareholder returns offset these discount elements."
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