[Click eStock] "Korea Asset Trust, Q2 Earnings Slightly Exceed Expectations"

[Asia Economy Reporter Eunmo Koo] Korea Asset Trust posted results for the second quarter of this year that slightly exceeded expectations. It is evaluated as normal performance if there had been no allowance for loan losses.

Korea Asset Trust's operating revenue for the second quarter of this year was 60.1 billion KRW, a 5.3% increase compared to the same period last year. Operating profit for the same period rose 88.6% to 41.8 billion KRW, and pre-tax profit increased 62.2% to 42.0 billion KRW. Although fee income decreased by 10.7% year-on-year, interest income increased, and other income from managing surplus funds also rose, resulting in performance exceeding expectations. Operating expenses decreased by 47.6% due to a sharp decline in loan loss expenses.

It is evaluated as normal performance if there had been no allowance for loan losses. On the 14th, Yoonho Cho, a researcher at DB Financial Investment, explained in a report, “The second quarter results of listed trust companies are simple but remind us of a very critical point,” and “It clearly shows the difference in trust companies' performance with and without allowance for loan losses.” He added, “Assuming no loan loss occurs, Korea Asset Trust's quarterly performance is judged to be at a normal level with operating profit of 40 billion KRW and net profit in the 30 billion KRW range.”

The investment opinion and target stock price were maintained at ‘Buy’ and 4,000 KRW, respectively. Researcher Cho analyzed, “Korea Asset Trust's second quarter results send a very positive signal,” and “Uncertainty related to loan loss costs has decreased for two consecutive quarters, and new orders have increased by 66.4% compared to the same period last year, indicating a shift to growth.” He explained that if stable performance is accompanied by an increase in orders, the current expected price-to-earnings ratio (PER) of 3.4 times is a very attractive price range.