[Click eStock] "Mirae Asset Venture Investment, First VC to Burn Treasury Shares... Sufficient Momentum for Rise"

First Venture Capital Listed Company to Conduct Treasury Stock Cancellation
Expected to Double Growth Compared to 2023... Strong Performance Growth
Valuation Undervalued Considering ROE

Hana Securities analyzed on the 8th that Mirae Asset Venture Investment has sufficient stock price growth momentum due to active shareholder returns such as being the first domestic venture capital (VC) listed company to conduct treasury stock cancellation, high earnings growth, and undervaluation appeal. The closing price of Mirae Asset Venture Investment on the previous trading day was 6,020 KRW.

Choi Jae-ho and Park Hee-cheol, researchers at Hana Securities, stated, "The expansion of shareholder returns is ultimately based on earnings improvement. The company is the only domestic VC listed company that has recorded an operating profit of over 30 billion KRW from 2020 to 2023." They added, "In this year’s case, along with capital gains from companies that conducted multiple initial public offerings (IPOs), the sale of the planned investment portfolio and the reflection of valuation gains are expected to achieve at least 60 billion KRW in operating profit and a return on equity (ROE) of over 15%. This means a twofold growth compared to 2023."

Mirae Asset Venture Investment recently decided to cancel treasury stock for the first time among domestic VC listed companies. The treasury stock corresponds to 2.6% of the total issued shares, representing 100% of all treasury stock held. The shares to be canceled amount to approximately 1.4 million shares, with a cancellation amount of about 9.8 billion KRW. The cancellation is scheduled for the 27th of this month. Researchers Choi Jae-ho and Park Hee-cheol noted, "It is understood that additional treasury stock purchases and cancellations are being considered after this cancellation, and it is expected to be conducted intensively every year." They added, "There is a significant possibility that the scale of shareholder returns will increase along with growing earnings. This can be seen as confidence in the profit growth of a VC company whose core business is investment."

From an investor’s perspective, the main investment point in VC companies is the expectation of profit recovery from the portfolio of companies invested in by the VC. The two researchers said, "Even if large capital gains have been realized, the possibility and uncertainty of continuous growth act as investment hurdles. However, the company is expected to show very high growth not only this year but at least until next year." They continued, "This year, capital gains were realized from the listing of previously invested materials, parts, and equipment (SoBuJang) companies such as ‘Sapien Semiconductor’ and ‘Kosem’, as well as from the on-market sale of about 40% of the shares held in ‘APR’, which was listed in February, achieving capital gains of more than 10 times the initial investment value." Furthermore, there are many portfolios (‘Moloco’, ‘Semifive’, ‘On Platform’, etc.) that received larger investments at lower valuations than APR, and the recovery period is approaching. This implies that valuation gains and disposal gains are expected to be maximized in the future.

Researchers Choi Jae-ho and Park Hee-cheol concluded, "Considering the ROE forecast, the possibility of valuation improvement is very high." They added, "There is sufficient momentum for stock price increases due to active shareholder returns, high earnings growth, and undervaluation appeal."