[Click eStock] "Korea Capital, Continued Expectation of Revenue Structure"

[Asia Economy Reporter Hyunseok Yoo] KB Securities analyzed on the 15th that the profit structure of Hanguk Capital is expected to continue. No investment opinion or target price was presented.

Hanguk Capital operates financial businesses such as corporate finance, lease finance, and retail finance in accordance with the Specialized Credit Finance Business Act. It was established in 1989 and welcomed the Military Mutual Aid Association as its major shareholder in 2001. As a domestic capital credit finance specialized company without deposit functions, it raises funds through corporate bonds and CP issuance.

In the first quarter, it recorded an operating profit of 16.1 billion KRW and a net profit of 11.5 billion KRW, representing increases of 69.8% and 61.5% respectively compared to the same period last year. KB Securities researcher Im Sang-guk said, "Continuous strong performance is being shown thanks to reduced funding costs due to credit rating upgrades and stable growth in the core business," adding, "As of the first quarter, total assets amounted to 2.8 trillion KRW, a 4.9% growth compared to the end of 2020."

KB Securities judged that the profit structure that drove the first quarter earnings growth will be maintained. Researcher Im explained, "Favorable conditions for raising operating funds compared to 2020 are being fully realized," and "Since the credit rating upgrade in November 2020, the funding cost rate has formed at around 2.1%, a 30 basis point decrease, highlighting a virtuous cycle of improved profitability due to reduced funding costs and continuous risk management such as decreased delinquency rates."

He emphasized, "Quantitative and qualitative growth of assets is occurring, with profitability improvements through portfolio diversification and expansion of new revenue models by entering new businesses such as used car financing," adding, "The non-performing loan ratio, an asset soundness indicator, improved to 1.77% compared to 1.97% at the end of 2020, and the capital adequacy ratio is also considered to be at a sound level of 13.26%."