3Q22 Forecast: Standalone NP at KRW267.1bn (-4.0% YoY)
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed.
Maintain BUY; lower target price 3.6% to KRW270,000
We maintain BUY on Samsung F&M but lower our TP by 3.6% to KRW270,000. We maintain BUY because (1) key profit margins should improve as long-term risk loss ratio continues to improve in 3Q22 and (2) capital stability should shine as it provides a solid buffer against capital uncertainties coming from surging long-term bond yields. Our TP applies a 1.0x target multiple (sustainable ROE: 7.6%→8.7%; COE: 7.6%→8.8%; TGR: 3.3%) to KRW271,985 12m fwd BVPS; surging long-term bond yields caused BVPS to fall 4.1% and COE to rise. We revise up 2022E standalone NP by 0.2% to KRW1.13tn but keep 2022E DPS at KRW12,300.
3Q22 forecast: Standalone NP at KRW267.1bn (-4.0% YoY), below market consensus by 2.0%
We forecast 3Q22 standalone NP at KRW267.1bn (-4.0% YoY), which is 2.0% short of the market consensus. We see a YoY drop because we expect overall loss ratio to climb 0.3pp YoY (auto loss ratio +3.3pp YoY; general loss ratio +2.0pp); loss ratios were pulled up by heavy rain in August and Typhoon Hinnamnor in September. That said, we expect long-term loss ratio to continue to improve, reaching 85.3% (-2.8pp YoY), while expense ratio is likely to remain flat YoY amid an 8.0% YoY jump in new personal insurance policies. Investment return should come in at 2.8% (+22bps YoY); we do not see any notable issues for disposal/valuation G/L, but investment return should be boosted by a 7.4% decline in value of invested assets caused by bond valuation losses (rise in interest rates).