[Click eStock] "NH Investment & Securities, Superior to Competitors in Shareholder Returns... Target Price Up"

Target Price Raised by 10.2% Compared to Previous Level

On the 8th, IBK Investment & Securities raised the target price for NH Investment & Securities from 12,700 KRW to 14,000 KRW, citing a competitive advantage in shareholder returns compared to its peers. The investment rating was maintained at 'Buy.'

Woo Dohyung, a researcher at IBK Investment & Securities, explained, "The reason for the target price increase reflects expectations of strengthened shareholder return policies due to the company's value-up program, and the average ROE used in the three-year target price calculation period was revised upward due to a change in the base year. NH Investment & Securities maintains a high dividend payout ratio based on stable performance and is judged to have an advantage over competitors in terms of shareholder returns."

NH Investment & Securities' Q4 performance last year fell short of market expectations. Researcher Woo analyzed, "The controlling shareholder net profit in Q4 increased by 28.3% year-on-year to 88.9 billion KRW, but it was 13.5% below the consensus (average securities firm forecast). The quarter reflected total expenses of 93 billion KRW, showing relatively favorable results compared to competitors." He added, "The expense details include 64 billion KRW for domestic and overseas real estate-related provisions and adjustments to the probability of default (PD) for NongHyup Holdings affiliates, 20 billion KRW in additional wrap loss compensation in Q4 following 20 billion KRW in Q3, and 9 billion KRW for derivative-linked securities (DLS) overseas alternative investment asset cost recognition. Wrap-related losses are expected to no longer be issued."

Although brokerage commission income declined, trading and IB showed solid performance. Researcher Woo stated, "Q4 brokerage commission income decreased by 29.3% quarter-on-quarter due to a decline in trading volume, and interest income related to brokerage also fell by 3.6%. However, trading profit increased by 30.3% in Q4 as falling interest rates improved operating profit, and corporate finance (IB) and other profits rose by 58.4%, showing a favorable trend."