[Click eStock] Why Samsung Securities' Target Price Was Raised But Investment Rating Lowered

On May 11, Daishin Securities raised its target price for Samsung Securities from KRW 1,270,000 to KRW 1,480,000, while simultaneously lowering its investment rating from 'Buy' to 'Marketperform.' The reasons cited were that expectations regarding the Integrated Foreign Investor Account have already been reflected in the stock price, and the likelihood of earnings upgrades this year is lower compared to competitors.

Hyejin Park, a researcher at Daishin Securities, stated, "We are raising our annual earnings estimate for 2026 by 7%, from KRW 1.52 trillion to KRW 1.63 trillion, and as a result of favorable industry conditions, we are also raising the target price for Samsung Securities by 16.2% compared to the previous estimate." She added, "However, we are downgrading our investment rating to Marketperform, as much of the expectations related to the Integrated Foreign Investor Account have already been priced in, and due to Samsung Securities' tendency not to actively use leverage, the potential for earnings upgrades this year is lower compared to competitors."

Samsung Securities outperformed market expectations in the first quarter of this year. Researcher Park explained, "First-quarter consolidated net profit was KRW 450.9 billion, up 81.5% year-on-year, exceeding the consensus (the average forecast of securities companies) by more than 15%, reflecting strong performance." She analyzed, "Given Samsung Securities' strength in the retail business, not only did brokerage commission income increase significantly due to a surge in trading volume, but revenue from wrap accounts and fund sales also grew, resulting in a substantial increase in financial product sales commission income."

Samsung Securities' brokerage commission income for the first quarter amounted to KRW 419.7 billion, a 130.9% increase year-on-year, while financial product sales commission income rose by 165.5% to KRW 89.6 billion.

Fee income related to investment banking (IB) increased by 26.2% year-on-year to KRW 41.6 billion, as the company handled multiple IPO lead manager roles and acquisition finance deals, including the K-Bank IPO, while maintaining solid revenues in structured finance. Researcher Park stated, "Despite the sharp rise in interest rates in March, gains from various valuation profits were reflected, resulting in a significant increase in product operation income to KRW 208.3 billion."