Hana Securities said on the 28th that if individual funds begin to flow in earnest into the domestic stock market, the average daily transaction value will rise and securities stocks will benefit. It picked Samsung Securities as an undervalued stock.
Go Yeon-su, a Hana Securities researcher, said, "Since the pledge for KOSDAQ 3000 was announced, securities stocks have been strong, with Kiwoom Securities—highly sensitive to transaction value—surging 13.7 percent," and noted, "It is very positive that the average daily transaction value of the domestic stock market has hit a record high of 71.7 trillion won based on the most recent five trading days."
Go added, "Even though KOSPI rose sharply last year, individuals' share of transaction value remained at the 64.2 percent level, meaning full-scale inflows have yet to begin," and said, "As individuals' share of domestic stock trading has been rebounding recently, expectations for future fund inflows remain valid."
The researcher then singled out Samsung Securities as the top pick within the sector. It is attractive as undervalued, trading below 1 time price-to-book ratio (PBR), and because brokerage and WM account for about 50 percent of net operating revenue, the degree of earnings improvement from increased transaction value is relatively large.
Go said, "If individuals return to the domestic stock market and the average daily transaction value increases to 50 trillion won, securities companies' net profit could grow by an average of 10 percent," and added, "For Samsung Securities, with this year's dividend per share (DPS) estimated at 5,100 won and an expected dividend yield of 6 percent, both earnings improvement and dividend appeal are likely to stand out."