Target Price Raised 6.1% to KRW7,000
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed.
Maintain HOLD; raise target price 6.1% to KRW7,000
We maintain HOLD but raise our TP by 6.1% to KRW7,000 on MAS based on the following:
(1) Concerns over high interest rates and economic slowdown this year should continue to affect asset market prices, which would change the value of investment assets held.
(2) MAS’ contribution of investment assets' valuation gains/losses to earnings is relatively high compared to that of rivals.
We raise our TP based on (1) an adjustment to 2023 ERP (7.16%→5.41%) and 2) a lowered valuation discount following the government's announcement of measures to assist real estate project finance. Our TP applies KRW18,694 12m fwd BVPS to 0.4x target multiple (sustainable ROE: 5.9%; COE: 10.6%→9.4%; g: 3.8%). We estimate end-2022 DPS at KRW200 and maintain gross payout ratio at ~30% (incl. stock retirement before this year’s shareholders' meeting).
4Q22 forecast: Consolidated NP at KRW175.6bn; above market consensus by 15.1%
We forecast 4Q22 consolidated NP (attributable to controlling interests) at KRW175.6bn (+69.5% QoQ, -2.9% YoY), which is 15.1% above the market consensus. We are above consensus because we expect Mirae HK's capital decrease (USD250mn) to reflect FX income of KRW90bn. We estimate brokerage income to decline 4.5% QoQ on decreases in trading value and margin loan balance. IB/other income, which fell sharply in 3Q22, should decrease 2.5% QoQ to KRW29.1bn (vs. 2021-1H22 quarterly avg. of KRW67.1bn). Trading & financial product income should rise significantly QoQ (+372.0%), resulting in a 174.6% QoQ increase in standalone NP, but consolidated NP should increase by only 69.5% QoQ because of the base effect created by valuation gains from consolidated investment assets recognized in 3Q22.