[Click eStock] "NH Investment & Securities, Highest Shareholder Return Rate in Industry... Target Price Up"

Target Price Raised by 5.9% Compared to Previous Level

On the 11th, KB Securities raised the target price of NH Investment & Securities from 17,000 KRW to 18,000 KRW, citing the expectation that the highest shareholder return rate within the securities industry will be maintained. The investment rating was maintained as 'Buy.'

Seunggeon Kang, a researcher at KB Securities, explained, "Following a shareholder return rate of 59.4% in 2023, a shareholder return rate exceeding 50% (dividends 45.4%, treasury stock 7.3%) is expected in 2024, maintaining the highest shareholder return rate within the securities industry. The relatively weak trading and product profit and loss in the second and third quarters of 2024 are recovering to normal levels in the fourth quarter, alleviating related uncertainties."

NH Investment & Securities' fourth-quarter performance last year fell short of market expectations. Researcher Kang analyzed, "The controlling shareholder net profit for the fourth quarter increased by 23.8% year-on-year to 110 billion KRW but missed the consensus (average securities firm forecast) by 7.8%. The shortfall was due to the recognition of approximately 40 billion KRW in provisions related to derivative-linked securities and an additional 40 billion KRW in provisions for real estate project financing (PF), totaling 80 billion KRW in expenses."

Brokerage-related fees increased by 22.5% year-on-year. Kang said, "Domestic stock commission fees decreased, but overseas stock commission income surged by 173.8%. Corporate finance (IB) and other fee income reached the highest quarterly level in 2024, increasing by 37.9% year-on-year. This was due to underwriting and arrangement fees as well as debt guarantee-related fee income rising by 20.4% and 41.1%, respectively."

It is expected that a stable shareholder return policy can be maintained. Kang forecasted, "In a situation where competition for capital securing in the securities industry continues in preparation for the issuance of promissory notes and comprehensive investment accounts (IMA) approval, NH Investment & Securities' standalone capital is expected to be around 7.4 trillion KRW by the end of 2024. Considering the current high shareholder return rate, standalone capital could exceed 8 trillion KRW by 2026, enabling growth opportunities and maintaining a stable shareholder return policy."