[Click eStock] "Meritz Financial, Earnings Improvement Raises Dividend Payout Ratio Expectations"

Daishin Securities analyzed on the 19th that Meritz Financial Group saw an increase in profits from Meritz Fire & Marine Insurance, and an improvement in Meritz Securities' performance is also expected. Accordingly, they maintained a 'Buy' investment rating and a target price of 120,000 KRW.

Researcher Hyejin Park from Daishin Securities stated, "Since improved earnings soon lead to an increase in the payout ratio, it is inevitable to welcome the earnings surprise."

Researcher Park added, "Out of the 500 billion KRW treasury stock trust contract signed in March, 3,288,000 shares worth 258.4 billion KRW were purchased by the end of June," and analyzed, "It is understood that purchases are being made at 4 billion KRW per day, so the second quarter net profit is expected to exceed estimates by nearly 200 billion KRW, which will further increase the expected payout ratio."

In particular, the capital procurement cost is expected to decrease due to the interest rate decline in the second half of the year. Researcher Park evaluated, "Corporate finance income, including Meritz Financial Group's real estate project financing (PF), has recovered to the 100 billion KRW level, and operating income has significantly increased due to the interest rate decline, achieving results that greatly exceeded expectations."

However, in the case of capital, net profit was somewhat sluggish at 37.8 billion KRW due to continued increases in reserve provisions and procurement costs.

Meanwhile, as of the end of June 2024, Meritz Financial Group's real estate PF exposure was recorded at 15.5 trillion KRW, with reserve provisions and reserves totaling 374.2 billion KRW and 355.6 billion KRW, respectively. Researcher Park added, "The reserve provision amount for the second quarter was 75 billion KRW, but 50 billion KRW was reversed, so the financial impact was not significant," and "Meritz Financial expects an additional reversal of about 48 billion KRW in the second half of the year."

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