[Click eStock] "Meritz Securities Recovers Shareholder-Friendly Policy with Treasury Stock Acquisition"

[Asia Economy Reporter Ji Yeon-jin] IBK Investment & Securities stated on the 26th that Meritz Securities showed solid performance in the process of reducing loans and debt guarantees in the third quarter, maintaining a buy investment opinion and raising the target price from the previous 5,500 KRW to 6,000 KRW.

Kim Eun-gap, a researcher at Meritz Securities, said, "After the announcement of the reduction in dividend payout ratio, concerns about shareholder-friendly policies increased, but it is being offset only by the acquisition of treasury stocks." He added, "In March, June, and November, treasury stock acquisition contracts of 100 billion KRW, 100 billion KRW, and 140 billion KRW respectively were disclosed, and since all are planned for profit cancellation, it will alleviate the disappointment of dividend reduction."

The cumulative consolidated net profit for the third quarter this year was 586.6 billion KRW, a 41% increase compared to the same period last year. The consolidated net profit for the third quarter was 189.2 billion KRW, a 1% increase compared to the same period last year, generating steady profits each quarter. Compared to other securities companies, the relatively small decline in profit compared to the first quarter is partly due to the low proportion of entrusted trading commissions, but it is also the result of favorable corporate finance commission income. Although the loan balance is on a decreasing trend, interest income increased as it was partially offset by an increase in credit extensions.

Asset management income decreased from the 170 billion KRW range in the first and second quarters to the 140 billion KRW range, but it is evaluated as solid performance. Researcher Kim said, "Considering that this performance was achieved in a situation where the balances of loans and debt guarantees, which were the main sources of income, are decreasing, it is judged to be very good performance," and added, "The debt guarantee ratio was reduced significantly from 214% at the end of 2019 to 96% (based on contracts), bringing it below 100%, and Meritz Capital is steadily increasing assets along with a significant increase in net profit."

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