[Click eStock] "JB Financial, Attention Needed on the Scale of Shareholder Return Expansion"

Hana Securities analyzed that more attention should be paid to the scale of shareholder returns expansion rather than overhang concerns regarding JB Financial. The investment opinion of "Buy" and the target price of 22,500 KRW were maintained.

On the 13th, Jeongwook Choi, a researcher at Hana Securities, explained, "Since the earnings announcement on February 6, JB Financial's stock price has fallen about 14.7%, showing the weakest performance among bank stocks and significantly exceeding the banking sector's average decline of 4.8%."

Researcher Choi cited four reasons for the stock price weakness. ▲As bank stocks generally entered a correction phase, downward pressure increased on JB Financial, which was trading at the highest PBR (Price-to-Book Ratio) within the sector due to a long period of stock price rise; ▲Uncertainty arose as there was no announcement of treasury stock repurchases for 2025; ▲If additional treasury stock cancellations occur in the future, major shareholders' stakes will exceed 15%, forcing them to sell excess shares, causing overhang concerns; ▲NIM (Net Interest Margin) decline pressure is expected to be greater than that of other banks.

Researcher Choi stated, "There is a plan to repurchase more than 110 billion KRW worth of treasury stock in 2025. Assuming all currently held treasury stocks are canceled and all treasury stock repurchases in 2025 are also canceled, the shareholding ratios of Samyangsa and Align Partners would increase to 15.67% and 15.06%, respectively," adding, "Since shares exceeding 15% must be sold, the larger the scale of treasury stock repurchase and cancellation, the more major shareholders will have to sell shares, which is presumed to have caused the overhang concerns."

However, he believed that more attention should be paid to the expected scale of shareholder returns this year rather than overhang concerns.

Researcher Choi said, "If about 110 billion KRW worth of treasury stock is repurchased this year, the number of shares repurchased would amount to approximately 6.6 million shares based on the previous day's closing price, which is about 3.4% of the total issued shares and about 16 times the average daily trading volume of 400,000 shares of JB Financial this year," adding, "Even assuming all currently held treasury stocks and the 2025 repurchased shares are canceled, the shares exceeding 15% that Samyangsa and Align Partners must sell would amount to only about 0.7% combined, which is a scale sufficient to more than offset overhang concerns."