Soaring Price of 'Korea Financial Group'

Institutions Concentrate Purchases Worth 75 Billion Won

[Asia Economy Reporter Minji Lee] The valuation of Korea Financial Group is rising day by day. As of 10:10 AM on the 16th, Korea Financial Group was trading at 107,500 KRW, up 1.42% from the previous trading day. This price represents an increase of about 33% since the beginning of the year. On the 13th, it reached an intraday high of 111,000 KRW, marking an all-time high, with a monthly return of 22%.

It is interpreted that institutional investors have driven up the stock price by actively purchasing shares of Korea Financial Group. Institutions have bought stocks worth 75 billion KRW this month, ranking fourth among all net purchase stocks.

The attraction for institutional investors comes from expectations for earnings. According to financial information provider FnGuide, Korea Financial Group is estimated to record a profit of 413.6 billion KRW in the first quarter. In terms of absolute profit, this surpasses the top six listed securities firms (Mirae Asset Daewoo, Korea Financial Group, NH Investment & Securities, Samsung Securities, Meritz Securities, Kiwoom Securities).

Brokerage revenue, which boosted securities firms' earnings last year, is expected to maintain a high contribution in the first quarter as well. The brokerage revenue of the top six listed securities firms is estimated to reach 1.6 trillion KRW, a 12% increase compared to the fourth quarter of last year, while Korea Financial Group is expected to record about 120 billion KRW, a 14% increase during the same period.

Improvement in profitability of the IB (Investment Banking) division is also anticipated. With the SK Bioscience IPO and inflows from equity capital markets (ECM), domestic non-residential real estate debt guarantees, and M&A advisory fees, the IB division's performance is expected to improve significantly. The subsidiaries' performance is also positive. Lee Hong-jae, a researcher at Hana Financial Investment, said, "The subsidiary Korea Investment Partners will reflect an investment recovery of 29 billion KRW from the IPO of Poland's Huuze Games," adding, "Capital and savings banks are also recording solid profits, so the subsidiaries' performance is expected to be robust."

An increase in the value of shares (31.8%) due to KakaoBank's listing is also expected. Recently, KakaoBank submitted a preliminary review application for listing on the Korea Exchange, with an anticipated listing around July to August. KakaoBank is trading in the over-the-counter market at a market capitalization exceeding 30 trillion KRW.

In the securities industry, Korea Financial Group is being presented as a top pick, with price targets raised. The highest target price suggested is 130,000 KRW. Kang Seung-geon, a researcher at KB Securities who proposed this target, explained, "Considering the stable IB division and the diverse subsidiaries, as well as the expanding contribution of subsidiaries' earnings, Korea Financial Group is expected to achieve more stable earnings growth compared to competitors."