Shin Kong Financial Holding Co (新光金控) said yesterday it has an embedded value of NT$23 per share as of the end of last year as evidenced by a re-evaluation — more than double its closing price of NT$10.35, thanks to value gains from real estate.
Property sales underpinned the conglomerate’s earnings in the first quarter with net profit of NT$6.29 billion (US$209.8 million), making it the third-best performer in terms of profitability among listed peers, company data showed.
The life insurance-focused group posted NT$7.43 billion in net income for the first three months of this year, a 1.44 times increase from the same period last year, despite a sharp decline in first-year premiums, Shin Kong Financial president Victor Hsu (許澎) said.
Shin Kong Financial posted NT$629 million in net profit last month, raising cumulative income to NT$8.28 billion as of last month with earnings per share of NT$0.95, the company said in a stock filing last week.
The showing made Shin Kong Financial the third-best performer among its 15 listed peers, from being second-worst last year.
Hsu attributed the earnings pickup to the divestment of an office building in downtown Taipei and falling hedging costs to 0.24 percent, compared with the target of below 1.3 percent, for foreign currency-based assets.
Shin Kong Life Insurance Co (新光人壽), the firm’s main subsidiary and principal source of income, “conducted a reassessment of its assets that showed its embedded value growing 13.68 percent to NT$194.4 billion from a year earlier on the back of unrealized value gains of NT$1.02 billion in its property investments,” Shin Kong senior vice president Sunny Hsu (徐舜鋆) said.
Embedded value for first-year premiums rose 11.1 percent to NT$14 billion at the end of last year, from a year earlier, according to the company’s updated figures.
However, first-year premiums declined 50 percent during the January-to-March period as rising costs softened demand for protection policies after regulators twice cut assumed interest rates last year, Sunny Hsu said.
Shin Kong Life expects total premiums to stay flat this year, Sunny Hsu said, adding that sales show signs of rebounding this quarter and the uptrend may be sustained as the economy improves. Shin Kong Bank (新光銀行) posted NT$1.03 billion in net profit last quarter, down 24 percent from a year earlier, due to a high base caused by investment gains in real estate-backed securities.