[Click eStock] "Mirae Asset Securities: Short-term Industry Outlook Unlikely to Improve"

Hyundai Motor Securities Report

[Asia Economy Reporter Minji Lee] Hyundai Motor Securities maintained a buy rating on Mirae Asset Securities on the 3rd and set a target price of 8,400 KRW.

Mirae Asset Securities' controlling shareholder net profit for the fourth quarter recorded 52.2 billion KRW, down 71.1% year-on-year, significantly missing market expectations. Brokerage and asset management fees decreased by 17.1% due to market contraction, while underwriting and arrangement fees improved compared to the previous quarter, resulting in total fee income decreasing by 12.4% quarter-on-quarter. Interest income and trading-related profits fell by 43.9% compared to the previous quarter. Accordingly, net operating income decreased by 32.5% year-on-year.

Hongjae Lee, a researcher at Hyundai Motor Securities, said, "The main one-off gain in the fourth quarter was about 90 billion KRW in foreign exchange valuation gains from the capital reduction of the Hong Kong subsidiary, but losses related to asset revaluation far exceeded this, causing profit deterioration," adding, "The scale of revaluation losses is provisional and may differ somewhat from the final audit report figures."

In the short term, a proactive improvement in business conditions is expected to be difficult. The average daily trading volume in January was similar to that of the fourth quarter, and there has been no significant rebound in the issuance and early redemption of ELS (Equity-Linked Securities). The outlook for IB (Investment Banking) is also conservative due to the slowdown in real estate finance. Researcher Lee said, "Since dependence on real estate finance is low and investment purpose assets will have limited additional profit volatility unless recession risks expand comprehensively," he explained.

Meanwhile, Mirae Asset Securities' stock price rose more than 12% last month, outperforming the KOSPI index. This reflects factors such as the long-term excessive decline in the stock price, the slowdown in interest rate momentum, and expectations of reduced real estate PF (Project Financing) risk due to credit market stabilization.

Lee said, "Although it will be difficult for the stock price to expand its gains as much as at the beginning of the year, since the business conditions are bottoming out, a long-term approach will be valid," and added, "Since the company declared that it will use 30% of ordinary profit for dividends and share buybacks, a differentiated shareholder return policy could be highlighted."