Meritz Securities Rises to 3rd Place in Securities Stocks Market Capitalization

Aggressive Share Buyback Policy
Effective Efforts to Enhance Shareholder Value
Stock Price Rises 9.1% This Year

[Asia Economy Reporter Park Jihwan] Meritz Securities has risen to third place in market capitalization within the securities industry for the first time since its listing. This achievement is attributed to its aggressive share buyback policy aimed at enhancing shareholder value, which proved effective amid a general correction in most securities stocks due to interest rate hikes and decreased trading volumes.

According to the Korea Exchange on the 11th, Meritz Securities closed the previous day at 5,620 KRW, up 240 KRW (4.46%) from the previous trading day. Meritz Securities’ stock price has risen 9.1% since the beginning of the year. This contrasts with the overall securities sector, which has experienced a correction as the benchmark interest rate began to rise and trading volumes, which had surged due to the Donghak Ant Movement, started to decline. During this period, major securities firms such as Mirae Asset Securities (-3.24%), Korea Financial Group (-0.12%), Samsung Securities (-5.01%), NH Investment & Securities (-4.40%), and Kiwoom Securities (-4.67%) all saw their stock prices fall.

As of the previous day, Meritz Securities’ market capitalization stood at 3.8313 trillion KRW, surpassing Samsung Securities (3.8086 trillion KRW) by 22.7 billion KRW, ranking third in the securities sector behind Mirae Asset Securities (5.3176 trillion KRW) and Korea Financial Group (4.4915 trillion KRW). As of 9:30 AM on the same day, Meritz Securities (3.02%) showed a greater increase than Samsung Securities (0.12%), widening the market capitalization gap between the two companies to 140.9 billion KRW.

The trigger for Meritz Securities’ stock price rise was the consecutive announcements of share buyback plans. Meritz Securities signed trust contracts to acquire treasury shares worth 100 billion KRW each in March and June of last year and completed the purchases. In November, it additionally decided on a trust contract to acquire treasury shares worth 140 billion KRW. Although Meritz Securities’ stock price sharply declined shortly after announcing a dividend cut in March last year, the effects of the share buybacks and forecasts of record-high earnings helped sustain the upward trend. Meritz Securities’ stock price rose 40.52% over the past year, significantly outperforming the KOSPI’s annual increase of 3.63%.

Its earnings stability is also highly regarded. Kim Eungap, a researcher at IBK Investment & Securities, stated, "The consolidated net profit for the third quarter of last year was 189.2 billion KRW, a 1% increase from the previous quarter," adding, "It consistently generates a certain level of profit each quarter, with 209.4 billion KRW in the first quarter showing little difference." The proportion of brokerage commission fees, which are heavily influenced by market liquidity, is lower compared to other securities firms, so the decline in profits from the peak first quarter is not significant. Kim said, "Concerns about shareholder-friendly policies increased after the announcement of a reduced dividend payout ratio, but these are being offset by treasury stock acquisitions," and forecasted, "If the planned profit retirement proceeds as scheduled, it is expected to alleviate the disappointment over the dividend cut."