[Click eStock] "IBK, Consecutive Capital Increases Make Share Price Dilution Inevitable... Target Price Down"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment evaluated that Industrial Bank of Korea's stock value has been diluted due to consecutive rights offerings, and its dividend attractiveness has also decreased. Accordingly, the investment opinion was maintained as Buy, but the target price was lowered by 4% from the previous 12,500 KRW to 12,000 KRW.

Choi Jungwook, a researcher at Hana Financial Investment, stated, "Industrial Bank of Korea resolved a rights offering of approximately 264 billion KRW yesterday," and analyzed, "The issuance price per share is 8,986 KRW, and the number of newly issued common shares is 29,379,034 shares, so stock value dilution is expected due to the third-party allotment rights offering to the government."

Researcher Choi added, "Small-scale government capital increases have been repeatedly conducted eight times since 2013," and evaluated, "However, this time the scale of the capital increase is somewhat larger than in previous years, and with the recent stock price decline, the issuance price per share has dropped to 8,986 KRW, increasing the dilution rate to around 4%."

In particular, "There is an additional 2 trillion KRW increase in 1.5% ultra-low interest loans to support companies affected by the COVID-19 supplementary budget, making an additional capital increase of around 150 billion KRW inevitable in the second half of the year," he explained.

Researcher Choi said, "Due to the forecasted profit decline this year, the dividend per share (DPS) for common shareholders is expected to fall from 670 KRW last year to 620 KRW," and added, "Considering the chronic discount on policy banks, the investment attractiveness within the sector is judged to be the lowest."

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