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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Korea Investment & Securities raised its target price for Samsung Securities (016360) by 10% from 59,000 KRW to 65,000 KRW, expecting improved dividend yield attractiveness. The investment recommendation was maintained as "Buy."
Korea Investment & Securities analyzed that Samsung Securities' fourth-quarter net profit was estimated at 147.7 billion KRW, which was 18% below their forecast and 5% below consensus. The slight underperformance in operating income, along with higher SG&A expenses due to strong annual performance, contributed to the miss.
By segment, the company's net trust fees totaled 138 billion KRW, up 1% from the previous quarter. Despite a decrease in domestic stock earnings, overseas stock fee income rose by 36% to 68.9 billion KRW. However, financial product sales income decreased by 25% to 27.7 billion KRW due to a drop in derivative-linked securities sales.
Underwriting and advisory fees fell by 7% to 68.1 billion KRW from the previous quarter. Analyst Baek Du-sun noted that structured finance revenue, which accounted for most of the investment banking (IB) fees at 57.3 billion KRW, showed growth in M&A and debt capital market (DCM) revenues during the same period, which was positive.
Product operation and financial profit totaled 210.7 billion KRW, down 26% from the previous quarter, though it improved by 270.7 billion KRW compared to the same period last year. Losses from loans impacting product operation were limited to 29.3 billion KRW.
Korea Investment & Securities also highlighted that Samsung Securities made meaningful progress in its shareholder return policy. "The dividend payout ratio, which had been gradually increasing in the past, stagnated between 35% and 39% from 2020 due to external variables. However, with the new mid- to long-term shareholder return goal set at 50%, we see the upper limit of the shareholder return band expanding," they emphasized.
The firm also noted that while the need for expanding equity capital remains for business expansion, especially in the investment banking (IB) sector, the long-term improvement in dividend yield attractiveness through higher payout ratios is clear. They projected that Samsung Securities' expected dividend yield for 2025 will be around 7%, starting from a high point.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
