Kiwoom Securities said on the 12th that if Korea Investment Holdings is approved as an integrated investment management account (IMA) operator, it could raise additional funding next year, improving profitability. It maintained a Buy rating and raised the target price 18% to 260,000 won from 220,000 won. Korea Investment Holdings' previous-day closing price was 169,800 won.
Korea Investment Holdings' third-quarter net income attributable to controlling shareholders came to 673.9 billion won, up 116% from a year earlier. That was an earnings surprise, beating the previous market consensus by 53%.
An Young-jun, an analyst at Kiwoom Securities, said, "Following the second quarter, all institutional sector of securities performed well," and noted, "The contribution of distribution revenue and the solid results of asset management subsidiaries were key."
On a separate basis, Korea Investment & Securities' brokerage fee profit and loss rose 53% from a year earlier on the back of strength in the domestic stock market. Domestic and overseas fee revenue increased 43% and 58%, respectively, from a year earlier.
Operating and other gains increased 48% from a year earlier, with one-off recognition of 140 billion won in subsidiary dividends and about 160 billion won in fund distribution income.
An said, "The contribution of consolidated results at Korea Investment & Securities is increasing, which appears to reflect a rise in the value of investment assets such as funds recognized for consolidation." As for notable items among subsidiaries, he explained that the strong contribution from asset management subsidiaries continued, following the second quarter.
Kiwoom Securities set an annual expected return on equity (ROE) of 20.1% for Korea Investment Holdings and a target price-to-book ratio (PBR) of 1.35 times.
An said, "There were one-off revenues in the third quarter, but even excluding those, quarterly recurring profit strength has risen to around 500 billion won, continuing from the second quarter," and added, "With approvals such as IMA going forward and additional borrowings, further profitability gains can be expected."