[Click eStock] "Mirae Asset Securities, Gradual ROE Improvement Expected"

On the 11th, Korea Investment & Securities maintained its investment opinion of 'Buy' and target price of 11,000 KRW for Mirae Asset Securities, expecting a gradual improvement in return on equity (ROE).

Baek Doosan, a researcher at Korea Investment & Securities, stated, "Although there are ongoing valuation losses in investment purpose assets which act as a discount factor, the improvement trend in ROE through shareholder returns, gradual capital reallocation, and earnings rebound is positive." He added, "The expected shareholder return rate for this year is 35%, estimated to be allocated between dividends of 113.5 billion KRW and treasury stock cancellation of 118.2 billion KRW." He further noted, "Additionally, after a capital reduction of 350 million USD (approximately 4,781 KRW) in the Hong Kong branch during the third quarter of this year, funds will be reallocated to India by early next year at the latest, and profitability related to overseas branches is expected to improve from next year onward."

Mirae Asset Securities' second-quarter earnings this year are expected to meet market forecasts. Researcher Baek explained, "The second-quarter net income attributable to controlling interests is expected to be 156.9 billion KRW, generally in line with consensus (average securities firm forecasts)." He continued, "Brokerage net revenue is projected at 173.9 billion KRW, showing only a 4% decrease from the previous quarter, indicating continued resilience. This takes into account a 4% decrease in domestic stock market contract amounts during the same period and that overseas stock market trading volume remained steady at 1,032 USD compared to the previous quarter."

Thanks to steady growth in asset management balances mainly from pensions, asset management net revenue is expected to have increased by 2% from the previous quarter to 67.9 billion KRW. Trading net revenue is forecasted at 204.9 billion KRW, a 32% decrease from the previous quarter but a 59% increase year-over-year. Baek said, "Although there was a decline compared to the first quarter due to base effects, bond management performance showed strong results as interest rates stabilized downward after May, and derivative operations were also favorable, leading to significant year-over-year improvement." He analyzed, "Corporate finance fees are expected to be 56.3 billion KRW, a 27% increase from the previous quarter, likely due to improvements in underwriting fees and others." He added, "It is estimated that there were valuation losses on alternative investment assets at a level similar to the previous quarter through a fair value revaluation of investment purpose assets worth 7.2 trillion KRW, and the impact of provisions related to real estate project financing (PF) was limited."

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