[Click eStock] "Meritz Securities, Steady Performance + Shareholder-Friendly Policies... Target Price Up 10%"

[Asia Economy Reporter Jihwan Park] IBK Investment & Securities maintained a 'Buy' rating on Meritz Securities on the 9th, highlighting its steady performance and strengthened shareholder-friendly policies, and raised the target price by 10% from the previous 5,000 KRW to 5,500 KRW.

Kim Eungap, a researcher at IBK Investment & Securities, evaluated that "Compared to other securities firms, the business structure has a higher proportion of interest income, so in the current environment where brokerage commissions have a greater impact on performance, the profit momentum may be relatively weak." However, he analyzed that there are investment points in shareholder-friendly policies such as treasury stock acquisition and dividend increases.

This year's consolidated net profit is expected to increase by 3.2% from last year to 576.3 billion KRW. He stated, "Although loan and debt guarantee balances are on a declining trend, resulting in decreased related income, it is being offset by fee income and operating income from other sectors."

Based on the separate income statement, this year's financial income decreased by 23%, while brokerage segment net operating income increased by 163%, and asset management net operating income increased by 76%. The number of customer assets and high-net-worth clients continues to grow steadily. Meritz Capital's net profit also increased by 30.1% from 102.9 billion KRW in 2019 to 133.9 billion KRW in 2020, showing an asset growth rate in the 9% range following 2019.

Improvements in capital ratios and strengthened shareholder-friendly policies are also notable. The net capital ratio significantly improved through a 200 billion KRW third-party allotment capital increase by major shareholders and increased net profit. The net capital ratio for business operations rose from 904% at the end of Q1 last year to 1,660% by year-end. He stated, "They announced the acquisition of 100 billion KRW worth of treasury stock by March next year, all of which is planned to be canceled."