[Click eStock] "NH Investment & Securities, Industry Momentum Decline... Dividend Confirmation Needed"

Hana Financial Investment Report
Target Price Revised Downward by 6%

[Asia Economy Reporter Minji Lee] Hana Financial Investment on the 24th issued a buy rating on NH Investment & Securities with a target price lowered by 6.3% to 16,000 KRW. Net profit this year is expected to decrease compared to the previous year.

Last year's annual controlling shareholder net profit recorded 948 billion KRW, a 64.3% improvement compared to the previous year, exceeding the previous estimate (899.4 billion KRW) by 5.4%. Thanks to significant improvements in annual revenue across all sectors from fee income to other income, net operating income increased by 40.6% year-on-year. The fourth quarter performance was favorable despite an unfavorable market environment such as a slowdown in brokerage indicators, and controlling shareholder net profit recorded a high profit growth rate of 171.9% year-on-year. Hongjae Lee, a researcher at Hana Financial Investment, said, "This is because the base effect from asset valuation losses and provision recognition in the same period last year was reflected," adding, "In the fourth quarter of last year, some of it was reversed to valuation gains, resulting in profits exceeding previous estimates."

Hana Financial Investment expects net profit to decrease by 21.8% this year. Considering the slowdown in market indicators, a profit decline compared to the previous year is inevitable. Researcher Hongjae Lee explained, "Nevertheless, the resolution of private equity fund and asset-related provision risks will improve earnings visibility," adding, "IB deals such as debt guarantees remain solid, and the impact of bond valuation losses will be reduced, making double-digit ROE achievable."

Currently, the average daily trading volume remains stuck in the low 20 trillion KRW range. Market interest rate volatility continues, limiting short-term momentum across the industry. However, if a high dividend payout ratio appears, its attractiveness as a dividend stock is expected to be further highlighted. Researcher Hongjae Lee said, "If a higher dividend payout ratio than the existing one (around 40% on a separate basis) is decided, it will be further highlighted as a dividend stock, making the company's stock price within the industry downwardly rigid," adding, "Since the capital uncertainty was also resolved by the parent company's rights offering in September last year, expectations can be placed on this."