[Click eStock] "HectoFinancial, Valuation Reassessment Needed Due to New Business Expansion"

On the 27th, Korea Investment & Securities analyzed that Hecto Financial's valuation should be reassessed considering the improvement in profitability of its existing business and the expansion into new businesses.

Researchers Ye-rim Kim and Ho-yoon Jung of Korea Investment & Securities forecasted that Hecto Financial will benefit the most among PG companies from the growth of cross-border e-commerce.

The two researchers stated, "Overseas settlement services benefit as the number of Korean sellers on cross-border platforms increases, presenting a new growth opportunity for Hecto Financial," adding, "Considering that Hecto Financial holds the number one market share in virtual accounts, has obtained a foreign exchange license, and has contracts with numerous global PSPs (Payment Service Providers), it is expected to be the first to dominate the overseas settlement solution market."

Hecto Financial provides overseas settlement services such as differential settlement, KRW settlement, and advance settlement targeting global platforms. It is the only company that has secured a foreign exchange license and automated foreign exchange remittance functions necessary for this business. Hecto Financial's overseas settlement solution, which integrates exchange rates and reduces currency exchange and remittance costs that varied by PG company, is already used by AliExpress and others. It has also signed a contract with PingPong Payments, Amazon's PSP, and is preparing to provide services.

Furthermore, the two researchers analyzed that the amendment to the Electronic Financial Transactions Act (EFTA), which took effect on the 15th, has created a need for safeguards for prepaid funds. They explained, "Among companies with prepaid agency licenses, only 2 to 3, including Hecto Financial, can immediately segregate and safely deposit prepaid funds," adding, "Since Hecto Financial also operates a PG business, providing PG payments necessary for settlement or charging will be a strength."

The two researchers forecast that overseas settlement PG will grow alongside the growth of reverse direct purchase, and demand for safe settlement PG will increase due to the EFTA amendment and the TimeF incident. Considering that Hecto Financial provides both settlement-related services and has expanded new businesses on top of its existing stable business, they stated, "The current 12-month forward PER of 8.4 times for Hecto Financial is attractive."