[Click eStock] "Hanyang Securities, Q2 Earnings Shock... Target Price Down 19%"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating on Hanyang Securities on the 18th and set a target price of 15,500 KRW, down 19%.

Net profit for the second quarter was estimated at 8.2 billion KRW, significantly below the estimate of 12.5 billion KRW. The operating environment was unfavorable due to a sluggish stock market and rising interest rates, and the PF market also slowed down, resulting in poor performance.

By segment, net fee income decreased by 10.5% year-on-year but increased by 4.9% quarter-on-quarter. Although the balance of debt guarantees further declined, advisory fees increased, leading to a quarter-on-quarter rise. The balance of debt guarantees fell by 32.9% year-on-year.

Interest income increased by 18.8% year-on-year. Interest-bearing assets decreased quarter-on-quarter, but the rise in interest rates significantly boosted interest income from securities. Loan receivables continued to decline after peaking in the fourth quarter of last year.

The trading and product profit and loss segment recorded a loss of 13.2 billion KRW, falling far short of estimates. Since 2018 until the first quarter of this year, the trading and product profit and loss segment had posted profits, but this time it recorded a large deficit. Improvement is expected in the second half of the year.

Other income fell significantly short of estimates due to increased bad debt expenses. However, since the scale of bad debt expenses is not large, it is analyzed that there is no concern about asset soundness.

Researcher Taejun Jeong of Yuanta Securities said, “Despite the decrease in the balance of debt guarantees, PF fee income increased mainly due to advisory fees, but trading and product profit and loss declined sharply and bad debt expenses also increased. Recovery in operations is expected in the second half as interest rates fall and the stock market rebounds, but the decline in PF exposure, which had driven external growth, due to the slowdown in the real estate market is a concern.”