Forecast to Log 2021 NP of W831.2bn

The author is an analyst of NH Investment & Securities. He can be reached at junsup@nhqv.com. -- Ed. 

 

KIH has been somewhat ignored by the market at yearend due to its relatively weak dividend yield. With only one day remaining before the ex-dividend date, however, we believe that KIH’s valuation merit will only improve from this point forward.

Raise TP to W105,000; maintain Buy rating

We raise our TP on KIH to W105,000 in reflection of upward revisions to our earnings estimates. Our new TP is calculated by applying a fair P/B of 0.98x to 2021F BPS of W106,742.

We maintain a Buy rating, as KIH’s 2021F P/E of 5.6x offers significant valuation appeal relative to peers.

To record 2021 NP of W831.2bn (+10.1% y-y)

KIH is forecast to log 2021 NP of W831.2bn (+10.1% y-y), backed by prospects for the strongest earnings growth among securities players under our coverage.


[KIS] 1) Strong retail income should continue. Daily average trading value (DATV) for the domestic stock market has been climbing (October W21tn → November W27.6tn → December W32.8tn) alongside an uptick in early ELS redemptions amid a rise in global market indices. In addition, the outstanding margin balance of the domestic stock market has recently reached an all-time high. 2) Traditional IB business remains healthy, with investment-focused IB business performing solidly on the back of robust domestic deals. In particular, following a good showing this year, the IPO market is likely to perform even better in 2021. 3) Commercial property-related uncertainties have eased as of late. 4) Chances are improving for the realization of equity-method gains from its stake in Kakao Bank (potential 4Q20 gains of W115bn; additional gains possible in 2021 on planned IPO of Kakao Bank).

[Other subsidiaries] With the VC industry posting strong earnings growth thanks to the recent success of bio/ICT stocks, subsidiary Korea Investment Partners (number-one AUM in domestic VC industry) is forecast to log sound earnings next year. Meanwhile, the firm’s savings bank and capital subsidiaries should come with solid earnings as well. In addition, KIS’s fund-related gains should also show improvement thanks to strong domestic and overseas stock market conditions.

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