[Click eStock] "Meritz Financial Group Likely to Be Included in 'Value-Up Index'"

Limited Possibility of Principal Loss in PF

On the 18th, SK Securities evaluated that Meritz Financial Group could expect additional stock price increases if a high level of shareholder returns continues in the future. They analyzed that the negative impact of the real estate project financing (PF) issue is limited. Accordingly, they initiated coverage with a 'Buy' rating and a target price of 100,000 KRW.

Seol Yongjin, a researcher at SK Securities, explained, "Considering that the core of the Japanese stock market reform plan, which the domestic value-up program benchmarks, is to improve capital utilization efficiency based on capital costs and profitability, Meritz Financial Group best fits this initiative."

Researcher Seol analyzed, "Considering the inclusion criteria of Japan's JPX Prime 150 index, when the value-up index is launched in the future, Meritz Financial Group, which continuously records profitability exceeding capital costs, is most likely to be included."

He added, "Meritz Financial Group's greatest strength is the industry's highest equity spread based on the high profitability of its insurance and securities subsidiaries, and the most efficient capital utilization in the industry, including shareholder return policies that comprehensively consider shareholder value."

Although PF soundness is a concern, its impact is expected to be limited. Researcher Seol diagnosed, "In the case of real estate PF, considering the high proportion of senior ranks and low LTV, even if auctions and sales are conducted at prices significantly discounted compared to appraised values, the possibility of principal loss is limited."

He added, "For overseas real estate, potential risks are somewhat higher, but considering conservative evaluations and profit resilience, it is at a sufficiently manageable level."