[Click e-Stock] "NH Investment & Securities: Earnings and Dividends Both Solid vs. Expectations... Target Price Raised"

Target Price Raised by 8% from Previous Level

On January 13, Korea Investment & Securities raised its target price for NH Investment & Securities from 2,550,000 won to 2,750,000 won, citing expectations that both earnings and dividends would remain solid compared to previous forecasts. The investment opinion was maintained as 'Buy'.

Baek Doosan, a researcher at Korea Investment & Securities, stated, "We have raised our 2026 net profit forecast by 11%, from 1.04 trillion won to 1.16 trillion won, reflecting robust market conditions and the expansion of productive finance, which led to higher estimated earnings from brokerage and capital-utilizing investment banking (IB) business." He added, "Additionally, due to the government's dividend-friendly policies, such as the separate taxation of dividend income, uncertainties surrounding NH Investment & Securities' shareholder return policy focused on dividends have been reduced, despite considerations such as maintaining 8 trillion won in standalone equity capital. Accordingly, we are also raising the expected dividend per share (DPS) for 2025 from 1,000 won to 1,200 won."

NH Investment & Securities' earnings for the fourth quarter of last year are expected to exceed market expectations. Researcher Baek commented, "The company’s controlling net profit for the fourth quarter of last year is expected to reach 213.6 billion won, 13% above the consensus (average analyst forecast). This reflects the stronger-than-expected performance in the brokerage segment and non-marketable asset valuation gains. Domestic stock commissions improved by 32% and overseas stock commissions by 24%, resulting in brokerage commissions of 220.3 billion won, up 30% quarter-on-quarter." Due to the increase in average balances of deposits and margin loans, net interest income related to wealth management (WM) is also estimated to rise by 14% to 124.3 billion won.

Operating investment gains and related net interest income are projected to decline by 35% quarter-on-quarter to 198 billion won. Researcher Baek explained, "This is due to weaker bond investment performance following the rise in market interest rates in November, as well as a base effect from strong IB investment-related gains in the previous quarter." However, he analyzed, "Compared to previous estimates, non-marketable asset valuation gains within IB investment-related profits appear to have held up well."

IB commissions are expected to decline quarter-on-quarter to 86.3 billion won. Researcher Baek said, "This appears to be driven by a decrease in underwriting and arrangement fees due to seasonality," adding, "Meanwhile, loan receivables valuation and disposal gains, including adjustments for default rates, are expected to see a narrower deficit compared to the same period last year."