The author is an analyst at NH Investment Securities. Her contact is her [email protected]. — Ed.
Reflecting the overall slowdown in the securities industry, we lower Daishin’s TP from KRW 23,000 to KRW 20,000, but maintain our Buy rating on the following points: 2) Attractive 2022 DY is 7.6%. Also worth noting is the planned listing of a global REIT at the end of 2022.
Maintain buy rating but lower TP from W23,000 to W20,000
Daishin Securities maintains a “buy” rating, and we appreciate its leap as a real estate finance specialist. As the securities industry slows down overall, earnings from the securities business are expected to be sluggish this year, but earnings from the real estate business are expected to make up for the overall earnings. Given both the likely additional real estate lending income in the second half of 2022 and the company’s high DY, we believe there is plenty of room for the stock to rise further.
Reduce TP from 23,000 won to 20,000 won. 1) Discount rate adjustment (45% → 50%) to reflect the current difficult market environment for securities firms 2) Change in risk-free interest rate assumption for calculating target P/B (2.0% → 2.5%) ).
2Q22 NP was KRW 91.4 billion (-76.2% yy, +37.8% qq)
Conditions: 1) Trading loss in the securities domain. 2) Reflecting the one-off item, Daishin announced his 2Q22 NP (excluding minority interests) at KRW 91.4 billion (-76.2% YoY, +37.8% QoQ), slightly out of consensus fell below The high base effect (yy) was at work as the gain on the sale of Nine One Hannam (pre-tax profit of KRW 4451 billion) was recorded in Q2 2021.
One-off items: The company will receive 104.4 billion in gains on the sale of Nine One Hannam penthouses, 18.5 billion in gains on the sale of U.S. real estate, 17.2 billion in gains on the sale of stocks, 15.0 billion in special performance employee incentives, and other one-time Accounted for provisioning and expense items. All in all, the total one-time profit was about 100 billion won.
IB: The company’s IB fee income decreased to KRW 15.8 billion (-42.1% YoY, -32.9% QoQ). Daishin’s strong IPO capabilities previously drove his IB earnings, but in Q2 2022 he has only conducted two IPOs.
Trading/Other Businesses: The company posted a bond investment loss of KRW 31.1 billion and an equity investment loss of KRW 5.9 billion.
Savings Banks: Daishin’s savings bank business recorded a pre-tax profit of KRW 10.5 billion (+14.1% y/y, +59.1% QoQ), with loans and deposits reaching KRW 2.6 trillion and KRW 2.7 trillion respectively.