[Click eStock] "Mirae Asset Daewoo, Profitability Improvement Trend to Continue in Second Half"

[Asia Economy Reporter Minji Lee] Ebest Investment & Securities maintained a buy rating on Mirae Asset Daewoo on the 7th and raised the target price by 16% to 11,000 KRW.

Mirae Asset Daewoo recorded a net profit of 300.7 billion KRW in the second quarter, achieving the highest profit ever. The surge in operating profit and expansion of brokerage revenue were key factors.

Researcher Bae-Seung Jeon of Ebest Investment & Securities said, “Based on an overwhelming scale advantage with equity capital of 9.5 trillion KRW and total assets of 135 trillion KRW, stable and excellent profit-generating capabilities are attracting attention,” adding, “The revenue from overseas subsidiaries also increased by 33% compared to the previous quarter, showing a high contribution to profits.”

In particular, thanks to the global stock market recovery and stabilization of credit risk, bond, derivatives, and PI (proprietary trading) profits improved significantly. Brokerage commission revenue increased by 31% compared to the previous quarter, with overseas stock revenue maintaining a 20% share, serving as a major pillar of the profit base.

IB-related revenue decreased due to a decline in debt guarantee fees compared to the previous quarter and the same period last year, and dividend and distribution income, which was recognized in large amounts in the second quarter, also shrank, indicating that the impact of the COVID-19 pandemic affected some business areas related to investment activities.

Researcher Jeon said, “Although operating profit will slow down in the second half, gradual recovery in the IB sector will be achieved based on strong brokerage revenue and steady interest income,” explaining, “Profitability improvement, potential for business area expansion, and shareholder return policies through share repurchase and cancellation procedures are positive for the stock price.”