Samsung Securities Co., Ltd.'s Target Price Cut to 110,000 Won as Trading Turnover Falls; Dividend Appeal Remains

[Financial News] DB Securities lowered its target price for Samsung Securities Co., Ltd. by 15.4%, from 130,000 won to 110,000 won. The decline in trading value on the domestic stock market reduced brokerage commission revenue, while adjustments to the discount rate applied to corporate value in response to rising interest rates also had an impact. However, analysts said its investment appeal remained intact, as third-quarter earnings met market expectations despite difficult market conditions and the dividend yield at the current share price stood at 8.9%. DB Securities maintained its “Buy” rating.
Na Min-uk, a researcher at DB Securities, said on the 13th, “A decline in trading value from the previous quarter made weaker brokerage and wealth management (WM) performance unavoidable,” but assessed that “recognition of major initial public offering (IPO) deals and active cost control helped the company fare relatively well despite the difficult environment.”
Samsung Securities Co., Ltd.'s third-quarter net income attributable to controlling shareholders was 352.8 billion won, up 14.1% from the same period a year earlier. It slightly exceeded the market forecast of 347 billion won. Operating profit rose 11.7% to 449 billion won but fell 4.9% short of the market forecast of 472 billion won.
The impact of the decline in trading value was clear. Brokerage commission revenue fell 42.4% from the previous quarter. Commission revenue from domestic and overseas stocks dropped 46.9% and 44.2%, respectively. Income from product operations and net financial income also declined 22.3%, affected by the weak stock market and a decrease in customer deposits.
Customer deposit balances stood at 18 trillion won, down 16.7% from the previous quarter, while credit financing balances fell 0.4% to 5.6 trillion won. By contrast, underwriting and advisory fees, buoyed by the recognition of major IPO deals, totaled 81.8 billion won, declining only 9.7% from the previous quarter.
Researcher Na said, “Underwriting and advisory fees held up relatively well thanks to the recognition of major IPO deals,” adding, “Selling, general and administrative expenses also fell 29.7% from the previous quarter, thanks to active cost control and the fading impact of bonuses recognized in the prior quarter.”
DB Securities lowered its forecast for this year's operating profit at Samsung Securities Co., Ltd. by 10.9% from its previous estimate to 2.072 trillion won, reflecting the decline in trading value. It also cut its forecast for net income attributable to controlling shareholders by 11.7%, from 1.746 trillion won to 1.542 trillion won. It lowered the target price further to reflect adjustments to the discount rate following the rise in interest rates.
Despite this, the dividend appeal was viewed positively. Researcher Na said the expected dividend yield at the current share price was 8.9%, meaning the appeal of high-dividend investing remained intact. However, considering requirements for approval of a comprehensive investment account (IMA), among other factors, Na forecast that the 50% shareholder return ratio would be reached in 2028.   

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