Posts 2Q22 NP of W91.4bn (-76.2% y-y, +37.8% q-q)
The author is an analyst of NH Investment & Securities. She can be reached at yd.yoon@nhqv.com. -- Ed.
Although we lower TP on Daishin from W23,000 to W20,000 to reflect a general slowdown in the securities industry, we maintain a Buy rating on: 1) the likely reflection of solid real estate financing income in 2H22; and 2) attractive 2022E DY of 7.6%. Also warranting attention is the likely end-2022 listing of Global REITs.
Maintain Buy rating, but lower TP from W23,000 to W20,000
We maintain a Buy rating on Daishin Securities (Daishin), positively evaluating the company’s leap forward as a real estate financing specialist. Its securities business earnings are to be tepid this year amid a general slowdown in the securities industry, but real estate-related business gains are to fill up its overall earnings numbers. Considering the both the likely booking of additional real estate financing income in 2H22 and the firm’s lofty DY, we see ample room for further share price upside.
We lower our TP from W23,000 to W20,000 on: 1) an adjustment in our discount rate (45% → 50%) to reflect the currently difficult market environment for securities players; and 2) a change in the risk-free interest rate assumption (2.0% → 2.5%) for calculating our target P/B.
Posts 2Q22 NP of W91.4bn (-76.2% y-y, +37.8% q-q)
Conditioned by: 1) trading losses at its securities domain; and 2) the reflection of one-off items, Daishin announced 2Q22 NP (excluding minority interest) of W91.4bn (-76.2% y-y, +37.8% q-q), slightly missing consensus. High-base effects (y-y) were in play due to the recording of gains from the disposal of Nine One Hannam (pre-tax gains of W445.1bn) in 2Q21.
One-off items: The firm booked Nine One Hannam penthouse disposal gains of 104.4bn, US real estate disposal gains of 18.5bn, stock sale gains of 17.2bn, special performance employee incentives of 15bn, and other one-off provisioning and expense items. On balance, total one-off gains were around W100bn.
IB: The company’s IB fees income fell to W15.8bn (-42.1% y-y, -32.9% q-q). Daishin’s strong IPO ability had previously been driving its IB earnings, but in 2Q22, the company conducted only two IPOs.
Trading/other businesses: The firm reflected bonds under management losses of W31.1bn and equity under management losses of W5.9bn.
Savings bank: Daishin’s savings bank business showed pre-tax income of W10.5bn (+14.1% y-y, +59.1% q-q), with loans and deposits upping to W2.6tn and W2.7tn, respectively.