[Click eStock] "NH Investment & Securities, Strong Dividend Appeal as Provision Concerns Ease... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Yuanta Securities evaluated NH Investment & Securities on the 7th, stating that concerns over provisions have been resolved and the high dividend is positive, and raised the target price from the previous 13,500 KRW to 15,000 KRW. The investment opinion was maintained as 'Buy.'

Jeong Taejun, a researcher at Yuanta Securities, said, "Since joining the holding company, NH Investment & Securities has maintained high dividends and stable growth without capital increases, so the return on equity (ROE), which was 2.1% at the time of incorporation in 2014, entered the 10% range as of last year, and the dividend per share has steadily increased, which is encouraging." He added, "Concerns about additional provisions for Optimus have also been largely resolved, so we raised the earnings estimates and adjusted the target price upward accordingly."

In particular, the strong dividend appeal is positive. NH Investment & Securities shows a dividend payout ratio of about 30% and a dividend yield in the 5% range on a consolidated basis. Additionally, the fact that the dividend per share has never decreased since joining the holding company is also considered a factor that enhances investment attractiveness. Researcher Jeong said, "Even if the industry conditions deteriorate in the future, a dividend yield of 5.4% can be guaranteed, and if the industry improves, there is a high possibility of additional dividend increases."

While the trading division's performance is expected to decline across the industry, NH Investment & Securities is expected to deliver relatively stable results. Due to the sluggish stock market, rising interest rates, and reduction of speculative equity-linked securities (ELS) hedges, the trading division's performance is forecasted to weaken industry-wide. Researcher Jeong analyzed, "This will be a major factor in the decline in performance in the second half, along with the decrease in trading volume. NH Investment & Securities mostly stopped speculative ELS hedges after the sharp stock market drop in October 2018, so it is difficult to generate significant trading profits in this market environment. However, even if another sharp market drop occurs like in March last year, it is positive that the company can deliver relatively stable results."