[E-Daily Reporter Park Jung-Soo ] On the 1st, Daol Investment & Securities assessed that DB INSURANCE(005830)has secured higher dividend levels and greater predictability in shareholder returns through its new corporate value enhancement plan. The firm maintained a “Buy” rating and set a target price of 270,000 won.
Kim Ji-won, an analyst at Daol Investment & Securities, stated, “DB INSURANCE announced a new corporate value enhancement plan on the 28th of last month,” adding, “This is the information disclosed following their announcement that they would provide specifics within the third quarter, and it meets expectations.”
Through its corporate value enhancement plan, DB INSURANCE outlined four key directions: strengthening core business competitiveness, managing capital efficiency metrics, building a global portfolio, and establishing a “Safety Floor” for shareholder returns. In particular, the core of the shareholder return policy is to expand the payout ratio from 25% (on a standalone basis) by 2028 to 50% by 2030.
The company has also expanded the funding sources for shareholder returns. Previously, shareholder returns were managed on a limited basis to preserve capital efficiency; however, moving forward, net income reported on the separate financial statements will be utilized as a funding source. The capital criteria for assessing the feasibility of shareholder returns have also been revised from a single Solvency Ratio (K-ICS) standard to a combined approach that considers both K-ICS and the Dividend Coverage Ratio (DCR).
Specifically, the company will maintain its target level of shareholder returns when the K-ICS ratio falls between 150% and 220% and the DCR is between 100% and 400%. If the K-ICS ratio exceeds 220% and the DCR exceeds 400%, the company will consider additional shareholder returns. Conversely, if the K-ICS ratio falls below 150% or the DCR is less than 100%, the level of shareholder returns may be adjusted. Daol Investment & Securities estimated DB INSURANCE’s distributable earnings as of the first quarter to be approximately 2.6 trillion won.
Daol Investment & Securities assessed that the revised policy has increased the likelihood of implementing shareholder returns. Analyst Kim stated, “This is positive in that it demonstrates the potential for shareholder returns,” adding, “By widening the range of K-ICS ratio fluctuations within the target range, the company has also ensured the stability of shareholder return implementation.”
The firm also projected that the dividend payout ratio would be higher than previously expected. Daol Investment & Securities expects the dividend payout ratio to rise by 2.5 percentage points annually from this year through 2028, and to reach a target of 50% (on a standalone basis) by 2030. Accordingly, the firm raised its dividend per share (DPS) forecast for this year from 8,200 won to 9,300 won. Based on the previous day’s closing price, the expected dividend yield is 4.8%.
However, the firm took a somewhat conservative view on share buybacks. It concluded that the likelihood of utilizing share buybacks is low, given that such buybacks are permitted only under exceptional circumstances and considering the significant tax benefits associated with high cash dividends. The firm also noted that, given the recent reduction in the number of shares pledged under stock pledge agreements by the largest shareholder and others as disclosed in recent filings, there may have been a need for cash to cover redemptions or similar obligations.
Analyst Kim commented, “It is positive that a shareholder return policy has been proposed that benefits ordinary shareholders through an increase in the dividend amount and the assurance of stability.”