NH Investment & Securities beats third-quarter net profit expectations despite lower trading value; target price: 32,000 won

[Financial News] SK Securities said NH Investment & Securities delivered results above market expectations in the third quarter through conservative management despite a contraction in the domestic stock market. It maintained its “Buy” rating and lowered its target price from 44,000 won to 32,000 won.
Youngim Jang, an analyst at SK Securities, said in a report on the 27th that NH Investment & Securities’ third-quarter net income attributable to controlling shareholders rose 35.5% year on year to 383.6 billion won. It fell 21.6% from the previous quarter but exceeded market estimates by 4.3%.
Fee income from brokerage and wealth management underperformed as stock trading value declined. Average daily trading value in the third quarter was 75.3 trillion won, down 36.2% from the previous quarter. Accordingly, brokerage commission revenue fell 46.7% quarter on quarter to 266 billion won.
As sales of target-conversion wrap products slowed amid a contraction in the stock market, wealth management fee income also fell 52.2% from the previous quarter to just 46 billion won. Fee income from investment banking and other segments declined 5.5% to 183 billion won.
“The biggest reason results were better than the market feared was investment and trading income,” Jang said. “By taking a conservative approach, including significantly shortening bond duration in preparation for rising interest rates, the company limited the quarter-on-quarter decline to 20.3%. ”
Investment and trading income totaled 201 billion won, up 56.7% year on year. As the education tax burden—which had risen sharply in the previous quarter amid weakness in the stock market—eased, selling, general and administrative expenses also fell 29.5% from the previous quarter.
Reflecting the recent weakness in the stock market, SK Securities lowered its forecasts for average daily trading value this year and next year to 83.9 trillion won and 58 trillion won, respectively. It accordingly forecast net income attributable to controlling shareholders of 1.637 trillion won this year, 5.8% below its previous estimate.
It expected trading value weakness to limit near-term share-price catalysts across the securities sector. However, it judged NH Investment & Securities’ investment appeal to remain intact, with an expected dividend per share of 1,800 won this year and a dividend yield of 8%.
“Even amid rapidly changing stock market conditions, NH Investment & Securities managed volatility steadily,” Jang said. “With a price-to-book ratio of around 0.8x and a dividend yield as high as 8%, it has ample investment appeal.”

[email protected] Lee Jeong-hwa Reporter