Samsung Life
The author is an analyst for NH Investment & Securities. He can be reached at junsup@nhqv.com -- Ed.
Samsung Life’s shareholder return is to strengthen in response its high capital ratio and better profit scale and stability following transition to IFRS17. The impact of IFRS17 actuarial assumption guidelines should prove to be limited.
Upgrade investment opinion in reflection of higher EV
We raise our SOTP-based TP for Samsung Life from W79,000 to W87,000, estimating: 1) EV of W5.5tn for headquarters and the firm’s stakes in financial affiliates following reflection of IFRS17/9 rules; 2) total stake value of W10.4tn for its non-financial affiliates; and 3) combined EV of W15.6tn, with value per share of W87,000.
We upgrade our investment rating from Hold to Buy, reflecting ample upside potential (versus current share price), heftier profitability, and higher (versus peers) shareholder return visibility.
Five reasons for loading up on Samsung Life shares
We draw attention to five key investment points for Samsung Life: 1) better profit scale and stability on conversion to IFRS17; 2) a likely high average CSM growth rate of 14% pa over the next four years; 3) modest burden from IFRS17 actuarial assumption guidelines; 4) a high possibility of shareholder return expansion; and 5) P/B improvement upon increased value of its SEC stake.
We foresee 2023 NP (excl minority interest) of W2.0tn, up 26.5% from IFRS4 in 2022 (+73.4% if excluding a one-off corporate tax refund booked last year). DPS should be around W4,000 (DPR 35.9%; DY 6.1%).
Given the effects of IFRS17 assumption guidelines, revision to future financial statements is inevitable. But compared to its competitors, Samsung Life is to experience less impact on its profit figures, shareholder return, and EV.