Hanhwa Sonbo's Stock Market Defense, Will it bear fruit early this year?

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เมื่อ: 2019-01-04 05:48:31
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Shares of Hanwha Insurance Co. failed to exert efforts last year, unlike other shareholders. Due to the relatively low percentage of automobile insurance compared to large companies, there are less expectations of increase in car insurance fees and poor performance.

CEO Park Yoon-sik and other management team made a strategy of protecting stock prices by buying stocks from November to December last year. Investors are paying keen attention to whether stock prices will rebound early this year as some of the uncertainties have been removed due to capital increase last year.

◆ Eleven Management Executives buy stocks for two months

According to the Electronic Public Notice System of the Financial Supervisory Service (FSS), 11 former and current executives of Hanwha Sonbo, including Park, purchased about 50,000 shares and 300 million won worth of shares in 13 times during the two months from November to December.

Park bought 10,000 shares and Lee Kang-man, vice president of the company who was promoted in the latest personnel reshuffle, also bought 40 to 10 stocks. In addition, Park Sung-gyu (5743), Kim Min-ki (3200 weeks), Han Sung-soo (2700 weeks), Sung Si-young (2500 weeks), Sung Si-young (2500 weeks), Park Ji-ho (2000 weeks), Lee Wi-hwan (1760 weeks), Kim Young-joon (1000 weeks), and his own stock. Former executive director Kim Won-ha, who retired late last year, also purchased 2374 shares in November. Park also bought 10,000 shares on October 31.

Management's buyback of shares is one of the most representative policies of stock price defense along with dividend policy. It is meaningful not only to express its commitment to responsible management but also to investors that stock prices will improve in the future.

This is the first time Hanwha executives have purchased shares since Kim Young-joon, the executive director of Hanwha Group, on September 6. Hanwha Group's management purchased shares in August, September, and October, but they focused on nine stocks in November and four in December for the last two months. During this period, seven out of 15 reports from Hanwha Securities Co. failed to come up with a bright outlook, including lowering Hanwha's target share price.

It can be interpreted that this buyback is meaningful in terms of stock price support. Hanwha's share price has been declining since the fourth quarter of last year, which is in contrast to other companies. Hanwha Group closed at 5,890 won on Friday, down 15.3 percent from October 1 last year.

The KOSPI index fell 2 to 3 times over the same period compared to Samsung Fire Insurance Co. (7.0 percent), Hyundai Marine Co. (5.1 percent), and DB losses (5.7 percent). Other owners have a significant temporary impact due to the dividend yield at the end of last year. During the same period, Meritz Fire & Marine Engineering increased 8.9 percent, showing contrasting performance.

Hanwha's stock price slump is also attributable to the decline in investment sentiment, as the proportion of the car insurance premium is lower than that of the large companies.

Hanwha posted a cumulative net profit of 115.5 billion won in the third quarter of last year, down 14.3 percent from the same period last year. Hanwha has been on a steep rise until 2016 since the inauguration of CEO Park Yoon-sik in June 2013, raising concerns that its stock price has skyrocketed but its performance has been sluggish this year. Annual net income (based on FY) increased for five consecutive years to ▲41.1 billion won in 2013 ▲ 12.9 billion won in 2014 ▲95.8 billion won in 2015 ▲111.6 billion won in 2016 ▲147.

However, the risk factor has been resolved for the time being, as Hanwha is expected to suffer from the increase in insurance premiums and the ratio of payment capacity (RBC), which is the index of soundness, is expected to be improved with capital increase worth 540 billion won (New Capital Securities: 190 billion won and subordinated bonds worth KRW 350 billion) last year. The RBC ratio was 19.9 percent at the end of September last year, which is estimated to be between 220 percent and 230 percent at the end of this year. The recommended level of financial authorities is 150%, and the level of stability in the industry is considered to be 200%.

"Unlike the strong performance of Son at the end of last year, Hanwha Investment & Securities continued to weaken due to poor performance and capital concerns," said Jeong Joon-seop, an analyst at NH Investment & Securities.


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