[Click eStock] NH Investment & Securities Conservative Loss Recognition

[Asia Economy Reporter Junho Hwang] Yuanta Securities has maintained the target price for NH Investment & Securities at 15,000 KRW. This target price is based on the outlook that although the securities core business continues to underperform, earnings can recover once the stock market rebounds.

NH Investment & Securities' consolidated profit for Q4 last year was 205.5 billion KRW, exceeding the company's estimate of 149.4 billion KRW and the consensus of 159.7 billion KRW. However, the standalone profit was 132.7 billion KRW, significantly below the company's estimate of 153.3 billion KRW.

Yuanta Securities expected that the consolidated profit would be lower than the standalone securities profit due to the impact of the stock market decline in the second half reflected in the asset revaluation in Q4. However, contrary to expectations, losses recognized in Q4 last year were additionally reversed, and strong performance from the Hong Kong subsidiary and hedge funds led to consolidated profit significantly exceeding the standalone securities profit.

Researcher Taejun Jeong of Yuanta Securities stated, "Brokerage and asset management fee income met expectations, but IB and other fee income fell significantly short of estimates," adding, "This is believed to be due to a decline in commission rates caused by intensified competition. Although there are many large IPOs this year, IPO fee income is small in scale, so recovery in project financing (PF) is expected to be important."