Daishin Securities
The author is an analyst of NH Investment & Securities. She can be reached at yd.yoon@nhqv.com. -- Ed.
Despite its main securities business remaining as solid as others, Daishin Securities turned to net loss in 4Q22 on one-off losses stemming from the booking of additional tax for Nine One Hannam. As it is difficult at this juncture for the company’s strengths (ie, its real estate revenue and its dividend attractiveness) to stand out, we maintain a Hold rating for now.
Maintain Hold rating and TP W14,000
We maintain a Hold rating on Daishin Securities, given: 1) rising uncertainties towards its earnings due to real estate market adjustments; 2) the needing of time for investment sentiment towards small/mid-sized securities firms to improve.
The company’s dividend guidelines tend to adhere to a DPR of 30~40% of non-consolidated NP and guarantee a minimum DPS of W1,200. The 2022 DPS of W1,200 (DY 9.3%, DPR 92% on a non-consolidated basis) met this mark, but the 2023 guidelines are yet to be determined.
We maintain a TP of W14,000, with a change in beta from 0.95 to 0.78 (2022 average) not altering our TP.
4Q22 review: Posts net losses (excl minority interest) of W70.9bn (TTL y-y, q-q)
One-off items: Daishin Securities’ 4Q22 results contained the booking of W83.6bn in additional tax for Nainwon Hannam set aside as provisioning. Although tax was paid based upon the general housing standard, Nainwon Hannam is classified under the luxury housing category and is thus subject to additional taxation. Of note, a pre-tax review is underway that will decide whether additional claims need to be paid in 1H23. Elsewhere, the firm recognized real estate sale revenue of W18.2bn, with pre-sales ratio reaching around 80%. Potential additional real estate revenue recognition this year has yet to be decided.
IB: The company’s IB fees income fell to W23.1bn (versus 3Q22: W10.3bn). Although fees were high due to the adjustment of the consolidated SPC, traditional IB and PF sales proved sluggish.
F&I: The firm’s F&I arm is expected to expand its NPL domain (its core business), but such hopes look premature at this stage.
Savings bank: Pre-tax losses shrank to W4.1bn. Although deposits climbed to W2.7tn, loans declined to W2.5tn. In line, loan-to-deposit ratio fell. Provisioning of W25bn was recorded.