Dividend yield of 7.6%

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

 

Samsung Securities’ 2022 dividend yield is estimated at 7.6%. In an unstable market, active dividend policy is a clear differentiation point. Sales at the structured finance business grew 15% y-y in 1Q22, with the firm rapidly strengthening its IB business capabilities. We maintain the company as our second-preferred pick for the sector

Dividend yield of 7.6%.

We maintain a Buy rating and TP of W51,000 on Samsung Securities.

The company’s 2022E dividend payout ratio is likely to exceed 30%, with dividend yield of 7.6%. As shareholder return policies become more important for financial players, dividends policy should eventually shift the firm’s share price. We view the recent excessive share price decline as a buying opportunity

Mid/long-term growth engines are abundant thanks to the gradual strengthening of the IB division and expansion of the overseas brokerage division. Although high-base effect is burdensome, it is noteworthy that significant qualitative improvement continues.

1Q22 NP (excl minority interests) reaches W151.8bn (-47.5% y-y, +5.3% q-q)

Samsung reported consensus-meeting 1Q22 results, with the IB and WM divisions defending against declines at the brokerage and trading divisions.

Brokerage: Domestic brokerage income slid y-y and q-q due to trading volume decline. But, the balance of overseas deposits came to W19tn, continuing to grow q-q. The company also maintained the top position in terms of overseas stock brokerage market share in 1Q22.

IB: The structured finance business expanded y-y, mainly thanks to balanced growth for residential buildings and distribution center-related deals. The firm is expected to gradually expand its capabilities throughout the year. Although it is unfortunate that traditional IB is sluggish, this is currently a common trait in the securities industry, and profit recovery is likely when the market rebounds.

Trading: Hedging costs due to the wild fluctuations of the HSCEI were reflected in 1Q22. The related ELS balance stands at about W2tn and the portion of in-house hedging is high at 70%, so negative impact is inevitable. However, as the loss was mostly recovered in April, an improvement should be seen in 2Q22.

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