"Securities Stocks Pass Q1 Bottom, Rebound Expected from Q2"…Top Preferred Stocks Are

[Asia Economy Reporter Lee Seon-ae] There is a forecast that securities companies' stock prices could rebound starting from the second quarter. On the 7th, NH Investment & Securities stated, "The first-quarter earnings of securities companies are inevitably expected to decline sharply compared to the same period last year due to a high base and unfavorable business environment," adding, "This marks the phase of passing through the bottom of the industry, and the second quarter is the time to weigh the possibility of a stock price rebound due to the easing of global risks." As the top preferred stock in the securities sector, Korea Financial Group was cited for its large IB (investment banking) revenue scale and high earnings stability.

Yoon Yoo-dong, a researcher at NH Investment & Securities, said, "The market's negative factors have already been excessively reflected in stock prices, and as signs of resolution appear one by one, there is a high possibility of entering a new phase," adding, "Despite undervalued valuations and high shareholder return policies, a rebound in securities stocks, which have been the most neglected within financial stocks, is expected."

Moreover, market indicators that can predict securities companies' earnings are no longer declining. The domestic daily average trading volume is maintaining the 20 trillion won level, and customer deposits of 63 trillion won and credit balances of 22 trillion won are slightly rebounding.

The valuation attractiveness of securities companies is also being maximized. Researcher Yoon assessed, "This year, securities companies' expected return on equity (ROE) is 12%, price-to-book ratio (PBR) is 0.5 times, and dividend yield ranges from 3.6% to 7.4%, highlighting the valuation appeal."

The first-quarter net income attributable to controlling interests of covered securities companies (Korea Financial Group, Samsung Securities, Kiwoom Securities, Mirae Asset Securities, and Daishin Securities) is estimated to be 910.2 billion won, down 32.1% year-on-year, in line with the lowered market consensus. Trading division profits are declining, while IB is expected to defend first-quarter profits by maintaining favorable operations centered on real estate PF (project financing).

He explained, "The second-quarter earnings of securities companies are expected to be 1.008 trillion won, which, excluding one-off factors, represents a 6% decline compared to the same period last year," adding, "Compared to the 32% drop in first-quarter earnings, the reduction in earnings decline is narrowing, which is positive."

Korea Financial Group was selected as the top preferred stock in the securities sector, with Samsung Securities as the second preferred stock. Researcher Yoon emphasized, "Korea Financial Group is the most comfortable choice due to its large IB revenue scale and high earnings stability," and "The second preferred stock is Samsung Securities, known as a high-dividend stock; although shareholder return policies will be highlighted in the second half, during difficult market conditions like recently, it is expected to support the downside of the stock price."

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