[Click eStock] "Refine, Undervalued Stock Price Compared to Growth Potential"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities evaluated on the 4th that Ripine's stock price remains significantly undervalued compared to its mid- to long-term growth potential.

Kim Sangpyo, a researcher at Kiwoom Securities, stated, "Ripine is the first company in Korea to pioneer the jeonse loan rights investigation business by devising the jeonse loan rights investigation service, making it the number one company in the jeonse loan rights investigation market." He added, "Although there is noise regarding regulations on jeonse loans due to the business structure being concentrated on jeonse loan services, solid performance is expected compared to concerns." Based on the expected 2021 performance, the price-to-earnings ratio (PER) is 13.3 times, which is considered a significantly undervalued range compared to the mid- to long-term growth outlook.

In jeonse loans, the risk for lending institutions arises from the imbalance where the property owner and tenant are different, leading to guarantees and debtors being separate. Ripine is the number one domestic company in the rights investigation business that connects guarantee insurance companies, non-life insurance companies, and banks during jeonse loans and has developed solutions to hedge risks arising from rights issues.

The core revenue from the jeonse loan service is recognized as investigation fees for rights investigations required by insurance companies when lending institutions subscribe to non-life insurance and guarantee insurance products. In the case of non-life insurance, 50-60% of the insurance premium, which is calculated proportionally to the jeonse loan amount, is received as rights investigation fees, while in the case of guarantee insurance, a fixed fee per rights investigation case is charged.

Although there were recent expectations that government regulations on jeonse loans would be strengthened, on the 14th of last month, the Financial Services Commission announced that this year's jeonse loans will be excluded from the total household loan limit. Researcher Kim Sangpyo evaluated, "There are concerns that sales volatility may increase due to the business structure concentrated on jeonse loan services following government policy changes, but the total amount of jeonse loans is not expected to decrease, and the number of jeonse loan rights investigations processed is also expected to remain at a similar level compared to the previous year, so market concerns about performance deterioration are excessive."

It is an analysis that the focus should be on mid- to long-term high growth prospects. Ripine's annual sales this year are expected to be 62.3 billion KRW, and operating profit 25.2 billion KRW, representing increases of 14.9% and 24.8% compared to the previous year, respectively. Researcher Kim said, "Although the growth rate of jeonse loan balances may be somewhat moderated due to regulations, demand for rights investigations will continue as long as jeonse loan contracts are renewed or housing deposits exist," adding, "It is also possible to demonstrate high profit margins due to operating leverage."