Meritz Securities, 'IB Structure Improvement' as a Future Stock Price Variable

[Asia Economy Reporter Ji-hwan Park] Kiwoom Securities on the 28th viewed that the improvement of the investment banking (IB) structure at Meritz Securities will be an important variable for future stock price trends.

Geun-tak Yoo, a researcher at Kiwoom Securities, stated, "Meritz Securities posted solid trading segment results in the third quarter, with net operating income reaching 290.8 billion KRW, a 48.9% increase compared to the same period last year."

He analyzed, "Compared to the previous quarter, the performance was sluggish due to weakness in corporate finance and financial income segments, and the brokerage segment was relatively weak compared to other large securities firms, resulting in less benefit from increased trading volume."

Researcher Yoo mentioned, "Following the real estate PF (Project Financing) advancement plan in December last year, the PF business, which had been a strength, is shifting from a total underwriting business to a sell-down business, making the downturn in the financial income segment inevitable."

He analyzed that it is a time when business structure improvement is necessary through discovering new businesses or expanding infrastructure sectors such as SOC. He evaluated, "Even if brokerage commission income decreases due to reduced trading volume after the fourth quarter, the risk is minimal because the proportion of related business is smaller compared to other securities firms, making it the large securities firm with the least risk in this regard."

In particular, the fact that provisions have been conservatively accumulated during the third quarter of this year and that there are no issues with non-performing private equity funds is positive, indicating relatively few cost-related issues.

Researcher Yoo emphasized, "At the current stock price level, a high dividend yield of 5.2% is expected, so attention should also be paid from the perspective of dividend yield."