Researcher Lee Byung-gun at DB Securities said on the 14th that Samsung Fire & Marine's relatively solid profit-and-loss trend and an upward adjustment in its dividends payout ratio (about 42.1%) raise the dividend per share (DPS), making the stock sufficiently attractive for investment.
On the day, the researcher maintained a Buy investment opinion on Samsung Fire & Marine and kept the fair price unchanged at 620,000 won. That is 24% higher than the previous day's closing price (500,000 won).
In the third quarter this year, Samsung Fire & Marine posted consolidation revenue of 5.7322 trillion won and operating profit of 664 billion won. Revenue rose 7.6% from a year earlier, but operating profit fell 7.4%.
The researcher explained, "It appears that weakness in insurance underwriting profit, driven by the gap between expected and actual loss ratios and expanding losses in auto insurance, was defended by strong performance in the investment segment."
The researcher predicted that next year's earnings outlook cannot be viewed as bright. "Relatively speaking, Samsung Fire & Marine is sound, but the industrywide expansion of claims experience loss is burdensome," the researcher said, adding, "Due to year-end assumption changes that adjust down the insurance contract margin (CSM), a net increase of more than 5% in CSM looks difficult, so profitability improvement will be hard."
However, the researcher said the possibility of future auto insurance premium hikes is a positive. "If dividends continue to increase within a year and about a 10% auto insurance premium hike is implemented, there is room to raise the additional target price by 10%," the researcher said.
The researcher added, "It is also a plus that the company additionally secured 800 billion won in equity of the U.K. insurer Canopius," and predicted it will seek business opportunities more aggressively in the global market.