2025-05-15-Jefferies-第一生命保险（8750）_2025财年3月业绩利润超预期_但前景令人失望_10页_229kb

FY3/25 Result Summary: Daiichi Life

Core Content

Daiichi Life reported its FY3/25 (March 2025) financial results, showing a strong performance in adjusted profit, but a disappointing outlook for the following year. The company beat both its JEF and internal profit targets, with notable growth in domestic and overseas segments, as well as a significant increase in dividends per share (DPS).

Key Positives

• Total Adjusted Profit: JPY440bn, +38% yoy, 4%/6% ahead of JEF/company target.
• Domestic Profit: +47% yoy, 7%/8% ahead of JEF/target, driven by a wider positive spread (+JPY75bn vs. +JPY40bn in plan) and partially offset by higher second career program costs.
• Overseas Profit: +30% yoy, 2%/4% ahead of JEF/target, supported by the non-recurrence of US bank failure, successful cost control, and FX tailwind.
• VNB Growth: Increased 61% yoy to JPY98.5bn (domestic) and 21% yoy to JPY73.7bn (overseas), mainly due to DL and PLC.
• DPS Increase: +21% yoy to JPY137 (before stock split), +JPY4 higher than company target.
• Share Buyback: JPY100bn announced, which is flat yoy.
• ESR: Now at 211%, still above the 170-200% target range.

Key Negatives

• Net Asset Value (NAV): Fell -10% yoy and -11% qoq.
• Group EV: Declined 4% yoy, due to higher VIF offset by lower ANW.
• Domestic Equity Value: Declined -17% yoy and -8% qoq, with a JPY664bn yoy drop.
• Equity Sales: JPY520bn of domestic equities sold, resulting in JPY414bn pre-tax gains.

Outlook

FY3/26 Adjusted Profit

• Expected to fall 7% yoy to JPY410bn, vs. JEF at JPY430bn.
• Decline led by lower core insurance activities at DL (-JPY40bn) and higher opex and interest expenses.
• Net new contribution from M&As is expected to offset the decline.

VNB for FY3/26

• Expected to increase to JPY190bn, +10% yoy (+JPY18bn).
• Positive growth in DL (+JPY41bn) offset by decline in DFL/NFL (-JPY9bn) and overseas (-JPY14bn from high base in PLC).

DPS for FY3/26

• Expected to increase to JPY192 before stock split, +40% yoy.
• After stock split, DPS would be JPY48, with a 4.5% dividend yield.
• Including buyback, total forward yield is +7%.

Investment Thesis

• Rating: Hold
• Price Target: JPY1,200, +12% from current price.
• Valuation Methodology: A combination of GGM and DDM, considering ROE and capital return potential.
• Forward PE: 10.7x
• Forward PB: 1.16x
• Dividend Yield: 3.1%

Risks and Scenarios

Downside Risks

• Subdued insurance demand
• Uncertainty around VNB recovery
• Changing rate expectations
• Overseas business volatility and US CRE/Vietnam risks

Upside Risks

• Stronger than expected positive spread
• Growth in key overseas markets
• Successful M&A in insurance and asset management

Scenarios

• Base Case: JPY1,200
• Upside Scenario: JPY1,576.63 (+47%)
• Downside Scenario: JPY822.92 (-23%)

Company Overview

Daiichi Life is a leading life insurer in Japan, demutualized and listed on the Tokyo Stock Exchange in 2010. It operates through three segments: Domestic Life, Overseas Insurance, and Other Business. The Domestic Life segment offers traditional and savings-type insurance products, while the Overseas Insurance segment operates in 9 countries with regional headquarters in New York and Singapore. The company holds over 10% of Japan's insurance market share.

Sustainability Matters

• GHG Emission Reduction: Target to reduce emissions by 50% by 2025 (Scope 1+2) and 30% by 2030 (Scope 3).
• Climate Change Solutions: Increase total loans and investments to JPY950bn by Mar 2025.
• Stewardship Activities: Aim to engage in all asset classes by mid-term.

Questions to Management

1. How will the margin (New business margin) improve or recover as sales activities normalize?
2. Will the reduction in GHG emissions in the investment and loan portfolio lead to better investment returns in the long term?

Valuation Methodology

Jefferies uses a combination of GGM and DDM for valuation, factoring in ROE, capital return, and dividend yields. Price targets are based on various methodologies, including DCF, EBITDA, EPS, and EV/EBITDA ratios.

Investment Recommendation

• Hold Rating: Expected total return of ±15% within 12 months.
• Franchise Picks: Not sector-based, but include only Buy-rated stocks with a favorable risk/reward ratio.

Important Disclosures

• Jefferies may have conflicts of interest due to its relationship with companies covered in the report.
• The report is not intended as a recommendation for individual investors.
• Investors should consider the report as one of many factors in their decision-making process.
• The report may not be suitable for all investors.