New Investment Points Materializing

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

 

For NICE Holdings, factors impeding earnings growth are being resolved. Former unlisted subsidiary BBS, which suffered significant losses, has been liquidated. For NICE LMS, we expect an earnings turnaround this year and IPO in 2023 at the latest. Subsidiaries such as Birdview and NBP also deserve attention. Currently trading at a 61% discount to NAV with 2022E DY of 3%, NICE Holdings looks attractively valued.

New investment points materializing (eg, regarding unlisted subsidiaries)

As a pure holding company at which most of its major subsidiaries are listed, NICE Holdings has received relatively little attention. However, several of its investment points are now being validated.

First, changes are being witnessed for its unlisted subsidiaries. The issue of losses at BBS has been completely resolved. In addition, though earnings at NICE LMS proved sluggish in 2021 compared to forecasts, an earnings turnaround is expected this year on continued order expansion.

Notable unlisted subsidiaries of NICE Holdings include Birdview, a subsidiary of KIS I&C (91.3% stake), and Nice Business Platform (NBP, 80% stake). Birdview launched and manages the Hwahae app, which has recorded 10mn downloads and MAU of 1.2mn. Meanwhile, NBP provides P2P-based securitization of receivables and electronic bills. As one of the fastest growing companies within its industry, we anticipate EV increase for NBP in the days ahead.

Among major listed subsidiaries, NICE Information Service, which is acknowledged for its value as a fintech business partner, is currently solidifying its credit bureau (CB) business position. As ITM Semiconductor is projected to see significant sales growth in 2022, NICE Holdings should enjoy y-y growth in consolidated earnings this year.

DY on the rise

NICE Holdings should log 2022 sales of W2.842tn (+16.0% y-y) and OP of W175.0bn (+21.3% y-y). With concerns over losses from unlisted subsidiaries such as BBS and LMS now resolved, earnings should normalize moving ahead.

The firm’s discount to NAV is now at an all-time high of 61%. Also deserving of attention is NICE Holdings’ rapidly rising DY, which is predicted to continue climbing from 0.5% in 2019 to 2% in 2021 and 3% in 2022.
 

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