[Click e Stocks] "Korea Financial Group, Up to 569.9 Billion KRW Profit Related to KakaoBank Listing"

[Asia Economy Reporter Song Hwajeong] Yuanta Securities estimated on the 29th that the profit related to KakaoBank's listing for Korea Financial Group would amount to 462.8 billion to 569.9 billion KRW. As KakaoBank's listing within the year was confirmed as expected, the investment opinion 'Buy' and the target price of 130,000 KRW were maintained.

On the previous day, KakaoBank announced its listing plan for early August, proposing the issuance of 65.45 million new shares with a public offering price band of 33,000 to 39,000 KRW per share. Researcher Jeong Taejun of Yuanta Securities analyzed, "Based on market capitalization, this corresponds to 15.7 trillion to 18.5 trillion KRW, which is about three times the expected capital of 5.1 trillion to 5.4 trillion KRW after listing. Initially, it was expected that KakaoBank would issue 81.53 million shares at 24,531 KRW per share in Q4 to reach capital of 5 trillion KRW, but a higher price with fewer new shares was decided."

Although the public offering price band was higher than expected, the investment opinion and target price were maintained because the one-time profit generated by the listing does not significantly deviate from the estimate. Researcher Jeong said, "If the listing price is determined at the lower end of the public offering price band under conservative assumptions, the equity method disposal profit recognized by Korea Financial Group in Q3 would be about 462.8 billion KRW, slightly exceeding the previous estimate of 412.6 billion KRW. Additionally, since the provision for the non-performing private equity fund to be recognized in Q2 must be reflected, the new annual profit estimate (1.3811 trillion KRW) is not significantly different from the previous one (1.3826 trillion KRW)."

KakaoBank's contribution to pre-tax profit in 2023 is expected to reach 9.8%. Researcher Jeong explained, "Assuming no additional capital increase, KakaoBank will contribute about 9.8% to Korea Financial Group's pre-tax profit in 2023. KakaoBank's annual return on equity (ROE) is expected to be 5.1% in 2021, 6.5% in 2022, and 9.9% in 2023, which is lower than Korea Financial Group's ROE." He added, "As the proportion of low-credit loans increases in the future, expense ratios and loan loss cost ratios may be higher than expected, potentially causing the ROE to fall below the above estimates."

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