[Click eStock] "Korea Financial Group, 2Q 'Earnings Shock' Expected... Target Price Down"

Hyundai Motor Securities on the 29th lowered the target price for Korea Financial Group from 83,000 KRW to 77,000 KRW. The investment rating was maintained as 'Buy.'

Hyundai Motor Securities expects Korea Financial Group's second-quarter earnings to be at an 'earning shock' level of weakness. The second-quarter net income attributable to controlling shareholders is expected to be about 150.9 billion KRW, a 51.5% improvement compared to the same period last year, but it is forecasted to fall short of market expectations by 23%. This is mainly interpreted as a base effect related to bond trading valuation gains. Additionally, one-time expenses such as provisions in the second quarter are expected to reach about 110 billion KRW, estimated to decline by 49.7% compared to the previous quarter.

Furthermore, provisions related to overseas commercial real estate are also expected to be partially reflected. Korea Financial Group's overseas real estate exposure exceeds approximately 2 trillion KRW, with the office sector estimated to account for about 19% of this. Accordingly, losses related to overseas offices in the second quarter are expected to be at least 20 billion KRW.

Lee Hong-jae, a researcher at Hyundai Motor Securities, said, "Despite a rebound in the securities industry in the first half of the year due to a decline in market interest rates and improvements in brokerage indicators, Korea Financial Group's market capitalization declined due to risks related to real estate project financing (PF), losses from contracts for difference (CFD), and uncertainties related to overseas commercial real estate." He added, "These risks are significantly reflected in the second-quarter earnings in the form of provisions, and it is expected to recover through recurring profit capacity thereafter."

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