[Alpha Biz= Reporter Kim Sangjin] On November 17th, Korea Ratings announced that it has downgraded Samjong Securities’ credit rating from 'BBB/Stable' to 'BBB/Negative'. The downgrade reflects concerns over the company’s deteriorating profitability and financial stability due to an unfavorable business environment and the increased cost burden associated with rapid business expansion.
In its credit rating report, Korea Ratings stated, “Considering the decline in profitability and financial stability following aggressive expansion and the challenging operating conditions, the outlook for Samjong Securities has been revised to ‘Negative.’”
Korea Ratings also noted that, while Samjong Securities has made efforts to strengthen capital and expand its business scope since joining the Samjong Group, its market position remains relatively weak. Despite a focus on corporate finance (IB) and asset management, the company has not yet established a stable profit structure, leading to its current challenges.
The report highlighted that Samjong Securities has reported five consecutive quarters of net losses from the third quarter of last year to the third quarter of this year. Additionally, the company faces further potential loan losses related to its real estate project financing (PF) business, making it unlikely that profitability will recover in the near term.
Samjong Securities' financial stability indicators have also deteriorated, with its adjusted leverage ratio increasing from 2.5 times at the end of 2022 to 11.8 times in September this year. Over the same period, its equity ratio dropped from 258.4% to 207.5%.
Korea Ratings outlined key factors for monitoring, including the recovery of profitability and earnings stability, as well as improvements in risk management and capital adequacy.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
