By Yoon Ja-young
Staff Reporter
Korea Life Insurance, which had a highly publicized debut on the stock market, seems to have lost momentum.
The insurer closed at 8,410 won, Thursday, gaining 0.72 percent from the previous day.
The company debuted on the bourse on March 17, and set two records, taking 11 percent of all transactions and rising to the top 29th in terms of market cap on the very first day.
It had reached 9,130 won per share, but has been falling and had once even neared 8,200 won, the initial offering price.
Analysts in Seoul have been generally optimistic about Korea Life Insurance, suggesting between 10,000 won and 11,000 won as a target price upon solid growth momentum.
``Korea Life has a stable assets portfolio, with domestic bonds taking up 47.9 percent, and loans receivable taking 29.8 percent. Concern over the soundness of the assets is also small, with non-performing loans taking only 0.4 percent and the reserve ratio for non-performing loans hovering at 282 percent,'' said Park Sun-ho, an analyst at KB Investment & Securities.
Solomon Investment & Securities expected profitability to improve for the next five years upon the falling interest rate burden on debt.
CLSA, meanwhile, issued a negative report on the insurer, saying the price isn't attractive for the short-term.
It pointed out that the insurer's market share fell to 14.3 percent as of the end of last year from 19.3 percent a few years ago. It was also negative that Korea Life Insurance depends too heavily on the traditional sales channel, instead of fast growing channels like bancassurance or direct marketing.
Foreign investors, however, seem to be disregarding the CLSA's report, as they have been buying Korea Life Insurance, while institutional investors have been generally in a selling mood to make short-term gains.
Some point out that stock prices tend to be sluggish right after an initial public offering (IPO). Short-term liquidity in the market is being used to buy stocks on public offering as real estate and funds turn sluggish, but investors are immediately selling them to reap short-term gains.