Record Earnings and All-Time Highs: Meritz Financial Group Soars

Stock Price Surges Past 1.3 Million Won to Set All-Time High
Strong Earnings and Enhanced Shareholder Returns Drive Rally
Record First-Half Results... 1.25 Trillion Won in Shareholder Returns Planned for This Year

Meritz Financial Group has not only achieved record-breaking results in the first half of this year, but its stock price has also reached an all-time high. The company's efforts to strengthen shareholder returns, along with continued institutional buying, are supporting the strong performance of its shares.

According to the Korea Exchange on August 22, Meritz Financial Group closed at 1,289,000 KRW on the previous day, up 8.32%. During the trading session, the stock climbed as high as 1,310,000 KRW, setting a new all-time high.

Meritz Financial Group’s stock has risen 11.31% so far this month. While the stock showed strength at the beginning of the year and climbed into the 1.2 million KRW range, it failed to maintain that level and subsequently stagnated between 1 million and 1.1 million KRW. The company was also left out of the pronounced rally in financial stocks seen in June and July. However, this month, the stock has regained upward momentum, showing a marked change.

It appears that the record-breaking performance has served as a driving force behind the stock’s rise. In the first half of this year, Meritz Financial Group recorded a consolidated net profit of 1.3584 trillion KRW. This figure is a 2.3% increase from the previous record of 1.3275 trillion KRW in the first half of last year. Second-quarter net profit also reached a quarterly record at 737.6 billion KRW, up 0.2% year-on-year.

The shareholder return policy has also contributed to the positive trend. On August 20, Meritz Financial Group announced that it had signed a trust agreement with Korea Investment & Securities to acquire treasury shares worth over 700 billion KRW in order to enhance shareholder value. The contract runs until March 31 of next year, and the purpose of the acquisition is to increase shareholder value. The treasury shares acquired through this agreement are scheduled to be canceled after the trust contract ends.

Back in March, Meritz Financial Group also signed a trust agreement to acquire treasury shares worth 550 billion KRW, and as of August 20, it had completed the purchase of shares worth 551.4 billion KRW. These shares are scheduled to be fully canceled on August 29. Ahn Youngjun, a researcher at Kiwoom Securities, stated, "The company showed relatively weak returns during the rapid market rally, but this was because its strong shareholder return policy had already been implemented, leaving little room for additional expectations. In the second half of the year, the company has continued to purchase approximately 7.5 billion KRW worth of treasury shares daily, and since the return on treasury share buybacks and cancellations exceeds the required rate of return, it is expected that the shareholder return policy centered on treasury shares will continue for the time being."

Continued institutional buying is also driving the stock’s strong performance. Institutions have been net buyers of Meritz Financial Group for 19 consecutive trading days as of the previous day. The net purchase amount during this period reached 130.2 billion KRW.

The company is regarded as a stable choice within the securities and insurance sectors, thanks to its solid profit base. Lim Heeyeon, a researcher at Shinhan Investment Corp., explained, "The subsidiary Meritz Securities has low earnings sensitivity to stock market fluctuations, while Meritz Fire & Marine Insurance has a solid profit base built on a stable Contractual Service Margin (CSM). Therefore, in periods when the investment appeal of the securities and insurance sectors is low, the company serves as a comfortable safe haven."

Researcher Ahn also commented, "As the company continues to deliver strong results and is expected to see rapid growth in Book Value Per Share (BPS) due to treasury share buybacks and cancellations, we can expect stable stock price growth going forward."