Korea Investment & Securities analyzed on the 1st that NH Investment & Securities' announcement the previous day of a capital increase of 650 billion won was "disappointing but understandable." The target stock price was adjusted down by 8% to 23,000 won, maintaining a "buy" investment opinion.
NH Investment & Securities' net profit for the second quarter this year was 256.7 billion won, exceeding market expectations (consensus) by 20%. Operating profits were stable compared to expectations, and brokerage fees and corporate finance (IB) fees also supported this performance. The net interest income related to operating investment gains for the second quarter was 314.4 billion won, a 59% increase compared to the previous quarter, with brokerage and IB fees increasing by 17% and 20%, respectively.
Despite strong performance in the second quarter, NH Investment & Securities decided on a third-party allocation capital increase targeted at NongHyup. This large capital increase is 9.4% of the existing number of shares issued. This is for the purpose of applying for IMA authorization this year. IMA will receive its first authorization application since the implementation of the system this year, and it must meet the capital requirement of 8 trillion won. As of the end of last year, NH Investment & Securities' capital was 7.4 trillion won, enabling it to meet the capital requirement through this capital increase.
Baekdu Mountain research analyst at Korea Investment & Securities stated, "There is a time lag between the inflow of funds and IMA business revenue, but unlike bills, IMA can be funded in the long term," adding that "Considering it is a securities company under a banking holding company, the expected return relative to risk is favorable, which adds to the attractiveness of the product."