'Earnings Surprise' NH Investment & Securities, Strong Performance Expected in Q3 as Well

[Asia Economy Reporter Koh Hyung-kwang] Daishin Securities stated on the 26th, "NH Investment & Securities' net profit for the second quarter reached 230.5 billion KRW, a 114.3% increase compared to the same period last year," adding, "This is an earnings surprise exceeding our estimates and consensus by 78.5% and 43.8%, respectively."

Researcher Park Hye-jin of Daishin Securities forecasted, "Performance is expected to remain strong in the third quarter," but noted, "However, the compensation amount related to the Optimus Fund will be a key issue."

Researcher Park explained, "The strong second-quarter results were driven by increased brokerage commission income and a recovery in product operation profits," adding, "The average daily trading volume for the quarter was 21.9 trillion KRW, with brokerage commission income rising 36.4% quarter-on-quarter to 167.9 billion KRW."

He continued, "Product operation profits, which were in deficit in the first quarter due to various valuation losses, turned positive in the second quarter, led by a recovery in ELS-related profits due to global index gains and a rebound in securities valuation losses, driving the improvement in performance."

Additionally, Researcher Park reported, "Despite IB operations being hampered by the COVID-19 pandemic, the company not only led major deals such as SK Biopharm and DreamCIS but also executed numerous PF deals, resulting in an increase in debt guarantee fees compared to the previous quarter."

Researcher Park mentioned, "IB-related revenue remained steady at 109.6 billion KRW, similar to the previous quarter, and several deals are pending in the ECM sector, including Big Hit Entertainment and Korean Air's rights offering, as well as multiple deals in the DCM sector."

However, he projected, "Due to a decrease in DLS issuance, fund-linked sales are expected to decline, and with a reduction in bond-type fund balances, asset management fees are likely to decrease."

Furthermore, he estimated, "The company's sales amount related to the Optimus Fund is 430 billion KRW, partially recognized as provisions in the second quarter and recorded as other operating expenses, estimated to be around 30 billion KRW."

This content was produced with the assistance of AI translation services.