Meritz Financial Group Inc. plunges 11% amid weak third-quarter earnings [Stock NOW]

[Financial News] Meritz Financial Group Inc. is plunging early in the trading session after its third-quarter results for this year came in below market expectations.
As of 9:36 a.m. on the 12th, Meritz Financial Group Inc. was trading at 115,200 won, down 14,300 won (11.04%) from the previous trading day. The stock opened at 125,100 won before falling as low as 115,200 won during the session.
The weaker investor sentiment is seen as a response to the third-quarter results announced the previous day, which fell short of market expectations. Meritz Financial Group Inc.’s consolidated net income attributable to controlling shareholders for the third quarter was 470.7 billion won, down 28.1% from the same period a year earlier. It also fell about 26% short of the market consensus of 634.5 billion won compiled by Shinhan Investment & Securities. Consolidated net income fell 26.6% to 490.5 billion won, while operating profit declined 39.7% to 519.9 billion won.
The decline in investment earnings at Meritz Fire & Marine Insurance, a key subsidiary, was a major factor behind the weak results. The insurer’s third-quarter net income was 328.5 billion won, down 29.2% from the same period a year earlier. Investment earnings fell 87% to 39.4 billion won. The results reflected about 140 billion won in losses on stock valuation and disposals, as well as 29 billion won in provisions related to real estate finance. By contrast, Meritz Securities’ net income rose 3.2% to 206.4 billion won.
Analysts say investors should focus on earnings volatility for the time being. Researchers Hee-yeon Im and Ji-yeon Lee of Shinhan Investment & Securities said, “We are in a phase where equity exposure is increasing earnings volatility,” and forecast that the company’s standing as a defensive stock could weaken until the peak in earnings volatility becomes clear. However, they maintained their “Buy” rating and target price of 142,000 won.
Alongside its earnings announcement, Meritz Financial Group Inc. reaffirmed its plan to continue its medium-term shareholder return policy, which sets total shareholder returns—including dividends, share buybacks and cancellations—at 50% of consolidated net income. The company has completed the acquisition of 700 billion won worth of treasury shares under an agreement signed in March, and is also proceeding with an additional 500 billion won acquisition agreed in August.

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