[Click eStock] "Korea Capital Secures Mid- to Long-Term Growth Engine Through New Business"

[Asia Economy Reporter Hyunseok Yoo] KB Securities analyzed on the 28th that Korea Capital is expected to secure mid- to long-term growth drivers through new business expansion into rental services and the used car finance market. No investment opinion or target price was provided.

Korea Capital operates financial businesses such as corporate finance, lease finance, and retail finance under the Specialized Credit Finance Business Act. Established in 1989, it welcomed the Military Mutual Aid Association as its major shareholder in 2001. As a secondary financial institution without deposit-taking functions, it raises funds through corporate bonds and commercial paper issuance. As of the first half of this year, total assets amount to KRW 2.4305 trillion, with total receivables including installment, lease, and loans at approximately KRW 2.0719 trillion.

Korea Capital is expected to sustain growth through balanced portfolio weight adjustments and expansion of operating assets. KB Securities researcher Sang-guk Lim stated, "Stable funding through the Military Mutual Aid Association and portfolio restructuring for risk management are underway, shifting from a lease finance-centered portfolio to one with equal weight in corporate finance and retail finance," adding, "If the credit rating improves, it will be possible to reduce funding costs and expand operating profit." He continued, "The credit rating is A-, and during the COVID-19 situation, only OK Capital and Korea Capital received positive outlooks from credit rating agencies. If the credit rating rises to the A level, a funding cost reduction of about 40 basis points is expected."

The new business is also positive. He explained, "Mid- to long-term growth drivers are expected through new business expansion into rental services and the used car finance market," adding, "The rental business and used commercial vehicle business started last year, and the used passenger car business is scheduled to expand significantly from this year." He further added, "Improvements in performance through internal operating asset portfolio adjustments and new business initiatives are leading to qualitative and quantitative expansion of the business."

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