Fubon Fi­nan­cial shares up on ac­qui­si­tion

The China Post - - TAIWAN BUSINESS -

Shares of Fubon Fi­nan­cial Hold­ing Co. ( ), one of Tai­wan’s lead­ing fi­nan­cial hold­ing com­pa­nies, moved higher Tues­day morn­ing af­ter the com­pany an­nounced that in­sur­ance arm Fubon Life In­sur­ance Co. ( ) will buy a stake in a Korean in­surer, deal­ers said.

The cur­rent buy­ing also re­flected op­ti­mism over Fubon Fi­nan­cial’s earn­ings prospects af­ter the com­pany re­ported a more than 70 per­cent year-on-year in­crease in net profit for the first five months of this year, they said.

As of 11:07 a.m., shares of Fubon Fi­nan­cial had added 2.52 per­cent to NT$65.20 (US$2.10), with 22.69 mil­lion shares chang­ing hands.

Led by Fubon Fi­nan­cial’s gains, the fi­nan­cial sub-in­dex was up 1.31 per­cent, while the weighted in­dex on the Tai­wan Stock Ex­change was up 0.83 per­cent at 9,418.88.

“In­vestors sim­ply seized on the ac­qui­si­tion lead to con­tinue to buy into Fubon Fi­nan­cial shares, push­ing up the broader mar­ket on Tues­day,” Hua Nan Se­cu­ri­ties an­a­lyst Henry Miao said.

Ac­cord­ing to the TWSE, for­eign in­sti­tu­tional in­vestors bought a net 4.43 mil­lion Fubon Fi­nan­cial shares Mon­day, mak­ing the stock one of the forces be­hind the mar­ket’s 1.33 per­cent rise.

Ac­quire a 48% Stake in Hyundai Life In­sur­ance

In a state­ment re­leased Mon­day, Fubon Fi­nan­cial said Fubon Life has agreed to ac­quire a 48 per­cent stake in Hyundai Life In­sur­ance, or about 37 mil­lion Hyundai Life shares, for about NT$6.12 bil­lion through a rights is­sue by the South Korean in­surer.

Af­ter the com­ple­tion of the deal, Fubon Life is ex­pected to gain five of the 11 seats on Hyundai Life’s board of di­rec­tors.

Hyundai Mo­tor Group, which has a 50 per­cent stake in the in­surer, will have the other six seats. The re­main­ing 2 per­cent stake will be held by some mi­nor­ity share­hold­ers.

The deal is pend­ing ap­proval from fi­nan­cial reg­u­la­tors in Tai­wan and South Korea, Fubon Fi­nan­cial said.

Ac­cord­ing to Fubon Fi­nan­cial, Hyundai Life was es­tab­lished in 1989, when it was called Green Cross Life In­sur­ance.

In 2012, Hyundai Mo­tor bought the in­sur­ance com­pany and re­named it com­pany Hyundai Life.

In 2014, Hyundai Life’s in­sur­ance premi­ums sur­passed 1 tril­lion South Korean won (US$905 mil­lion), and in the first quar­ter of this year, its premi­ums topped 264.1 bil­lion won, up 44 per­cent from a year ear­lier.

“The deal showed Fubon Fi­nan­cial’s am­bi­tion to ex­tend its reach over­seas af­ter big ac­qui­si­tion deals re­cently. Its ex­pan­sion ef­forts prompted in­vestors to buy this morn­ing,” Miao said.

Among Fubon Se­cu­ri­ties’ ma­jor ac­qui­si­tion deals, the com­pany teamed up with another sub­sidiary, Taipei Fubon Com­mer­cial Bank, to ac­quire an 80 per­cent stake in Shang­hai-based First Sino Bank in early 2014.

First Sino Bank was re­named Fubon Bank (China) Co. in April 2014.

“Fubon Fi­nan­cial is plan­ning to raise about NT$80 bil­lion in funds this year for more ac­qui­si­tion deals. Based on my un­der­stand­ing, the com­pany has set its sights on small-sized fi­nan­cial in­sti­tu­tions in China,” Miao said.

Miao said in­vestors have been im­pressed by Fubon Fi­nan­cial’s prof­itabil­ity. In the first five months of 2015, the com­pany posted NT$37.45 bil­lion in net profit, up 76.5 per­cent from a year ear­lier, with earn­ings per share at NT$3.66.

“Fubon Fi­nan­cial still holds a large chunk of for­eign gov­ern­ment bonds. If it con­tin­ues to divest the bonds in the sec­ond half of this year, it’s EPS for 2015 could climb above NT$6,” Miao said.

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