[Click eStock] DGB Geumyung Jiju, Investment Appeal Declines... Target Price Down to 11,000 Won

Kiwoom Securities lowered the target price for DGB Financial Group to 11,000 KRW on the 3rd, stating that although it has the lowest price-to-book ratio (PBR) among bank stocks, its investment appeal is lacking. The investment rating was maintained at 'Buy.'

Kim Eun-gap, a researcher at Kiwoom Securities, explained in a report on the same day, "The PBR based on the book value per share (BPS) at the end of 2024 is 0.23 times, the lowest among bank stocks and low in absolute terms as well. However, the ROE forecast is also 6.7%, the lowest among bank stocks, so we judge that its valuation appeal is not relatively higher compared to other bank stocks." He suggested a target PBR of 0.30 times.

He also judged that the capacity to strengthen shareholder returns appears relatively low. Researcher Kim Eun-gap said, "We expect the point at which the common equity tier 1 capital ratio target of 12% is reached to be 3 to 4 years from now," and analyzed, "The shareholder return ratio, including share buybacks, was 28.8% in 2023 and is expected to exceed 30% in 2024."

DGB Financial Group's consolidated net profit for the first quarter was 111.7 billion KRW, down 33.5% year-on-year. This was 19% below the forecast, largely due to provisions for real estate project financing (PF) amounting to 15.3 billion KRW in the banking sector and 36.5 billion KRW in securities. The securities division continued to post losses following the previous quarter.

Accordingly, Kiwoom Securities lowered its 2024 consolidated net profit forecast for DGB Financial Group by 8.4% to 406 billion KRW. The consolidated net profit for 2024 is expected to increase by 4.7%.

Researcher Kim Eun-gap stated, "The net profit of the banking sector, which accounts for an absolute majority of earnings, decreased by 6.5% year-on-year, but excluding the large provision expenses, it showed a slight increase," adding, "The net profit was relatively stable compared to the non-bank sector, which saw a 72% year-on-year decrease."

He also analyzed that during the same period, the securities division among non-bank sectors turned to a loss, while life insurance and capital showed a significant decline in profits.