[Click e-Stock] "Meritz Financial Group, Target Price Raised... 6% Shareholder Return Yield in Focus"

On the 12th, Kiwoom Securities raised its target price for Meritz Financial Group to 170,000 won and maintained its "Buy" rating, stating that the shareholder return yield is expected to reach the mid-to-high 6% range.

Meritz Financial Group's net income attributable to controlling shareholders in the fourth quarter of last year was 310.7 billion won, down 9% year-on-year, in line with market expectations. During the same period, net income at Meritz Fire & Marine Insurance increased by 6%, while net income at Meritz Securities decreased by 19%. Ahn Youngjun, an analyst at Kiwoom Securities, assessed, "In the case of Meritz Securities, net income declined year-on-year due to valuation losses and other factors, but excluding these, the results were solid compared with concerns about industry conditions."

By affiliate, Meritz Fire & Marine Insurance delivered strong results. Its insurance underwriting profit jumped 210% year-on-year. This appears to have been largely driven by the reversal of around 300 billion won in loss-sharing contract costs related to third- and fourth-generation indemnity health insurance products. Net operating income at Meritz Securities increased 17% year-on-year. Fee and commission income rose 77% over the same period, with brokerage (stock trading services) and investment banking (corporate finance) income up 56% and 18%, respectively.

Ahn commented, "Meritz Financial Group has proactively implemented an aggressive shareholder return policy, but because last year's profit growth was not large, the expected shareholder return yield has risen to the mid-to-high 6% range," adding, "Next year's projected net income is 2.48 trillion won, and the shareholder return amount is estimated at 1.55 trillion won, translating into an expected yield of 6.7% compared with its market capitalization of 23 trillion won."

He continued, "In 2024, when the shareholder return policy was implemented, the shareholder return yield was in the mid-5% range, so an additional 10% to 20% upside in the share price can reasonably be expected," and added, "If industry conditions recover this year, additional momentum from annual earnings growth is also anticipated."

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