Target Price Raised 13.2% to KRW77,000
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed.
Maintain BUY; raise target price 13.2% to KRW77,000
We maintain BUY on KIH and raise our TP by 13.2% to KRW77,000. We also add KIH to our list of securities stocks of interest given that (1) real estate project finance risk may be reduced through related government measures and (2) Korea Investment & Securities should see increases in CP issuance cap, IB/trading limit and leverage after acquiring Kakao Bank shares from KIH and Korea Investment Value Asset Management.
In late December, KIS purchased Kakao Bank shares from KIH and KIVAM at KRW26,350/share. KIH used some of its proceeds (KRW300bn) to participate in KIS’ capital increase; KIVAM is likely to channel most of its proceeds into dividend payments this year, contributing to an increase in KIS equity capital (approx. KRW6.4tn-KRW8.4tn). We raise our TP based on (1) a 2023 ERP adjustment (7.16%→5.41%) and (2) a lowered valuation discount following the government’s announcement on measures to assist in real estate PF. Our TP applies a 0.5x target multiple (8.6% sustainable ROE; COE down from 14.5% to 13.5%; 3.8% TGR) to KRW151,836 12m fwd BVPS. We estimate end-2022 DPS at KRW2,700.
4Q22 preview: Consolidated NP at KRW148.6bn; below market consensus by 10.5%
We forecast 4Q22 consolidated NP (attributable to controlling interests) at KRW148.6bn (-10.3% QoQ, -51.7% YoY), which is 10.5% below the market consensus. Standalone NP should climb 19.4% QoQ. IB/other income should inch up 3.6% QoQ and trading/financial product income should jump 69.9% QoQ amid a 7.9% drop in brokerage-related income stemming from decreases in stock trading value and debit balance. However, consolidated NP retreated because of a high base created by a decrease in Savings Bank’s loan loss provisioning and a KRW13.5bn gain on valuation of ship financing bonds.