[Click eStock] "Kiwoom Securities, Expected Benefits from Corporate Value-Up Program... Target Price Up"

Target Price Raised by 17.4% Compared to Previous Estimate

On the 15th, IBK Investment & Securities raised the target price for Kiwoom Securities from 115,000 KRW to 135,000 KRW, expecting it to benefit from the corporate value-up program. The investment rating was maintained as 'Buy.'

Woo Dohyung, a researcher at IBK Investment & Securities, stated, "We believe that active share repurchases and cancellations will allow Kiwoom Securities to benefit from the corporate value-up program. Although concerns related to real estate, confirmed through performance, exist, they are expected to solidify the downside of the stock price, leading us to raise the target price by 17.4% compared to the previous level. Additionally, due to the expected increase in trading volume in the first quarter influenced by the corporate value-up program, we anticipate this will positively impact the 2024 earnings improvement, maintaining Kiwoom Securities as our top pick."

Kiwoom Securities’ fourth-quarter results last year met market expectations. Researcher Woo said, "In the fourth quarter, Kiwoom Securities reported a net loss attributable to controlling shareholders of 191.4 billion KRW, aligning with the consensus estimate (average of securities firms’ forecasts) of 187.5 billion KRW and our estimate of 185.2 billion KRW. A total of 511 billion KRW in expenses were recorded in the fourth quarter, including 450 billion KRW related to Yeongpung Paper and other receivables, 30 billion KRW in conservative provisions related to real estate project financing (PF), and 31 billion KRW in overseas real estate-related expenses (25 billion KRW for the London office and 6 billion KRW for the Gentoo Fund). Excluding the Yeongpung Paper-related expenses, the level of expenses recorded is considered favorable compared to other companies," he analyzed.

In the fourth quarter, commission income from brokerage decreased by 23.7% quarter-on-quarter due to a decline in trading volume, but the market share of overseas stock trading volume improved by 3.1 percentage points to 31.9%, recording a favorable level. Interest income related to brokerage decreased by 6.8%. Corporate finance (IB) and other fee income increased by 17.1%, but recovery remained slow due to the absence of new real estate PF deals. Trading and other income showed poor performance due to provisions despite favorable operating income from declining interest rates. Non-operating income was weak due to valuation losses related to overseas real estate. Researcher Woo added, "Among subsidiaries, the savings bank showed good performance due to cost reversals following refined provisioning standards, while the capital company showed poor results due to conservative PF provisions."

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