Samsung Securities said on the 12th that although it missed the consensus (market average forecast) for Korea Investment Holdings due to a conservative provision build, meeting the requirements for separate taxation on dividend income was a surprise. It maintained a Buy rating and raised its target price by 17.4% to 270,000 won. The previous day's closing price of Korea Investment Holdings was 226,500 won.
Korea Investment Holdings' controlling interest net profit on a consolidation basis in the fourth quarter of last year was 348.7 billion won, up 11.5% from a year earlier. It missed the consensus by 9%. On a consolidation basis, the securities subsidiary's net profit came to 301.7 billion won, up 138% from a year earlier.
Jeong Min-gi, an analyst at Samsung Securities, analyzed, "While brokerage and brokerage-related interest and other recurring business results were strong, the investment banking (IB) result came in at 113.3 billion won, down 42% from the previous quarter, due to an approximately 50 billion won provision related to real estate project financing (PF)."
In addition, due to weak bond management from rising interest rates and reduced foreign exchange gains and losses from the won-dollar exchange rate increase, the asset management division's profit and loss recorded 203.0 billion won, down from the previous quarter. Meanwhile, at the savings bank subsidiary, it was estimated that about 100 billion won in provisions were booked due to adjustments to personal credit loan private debt (PD) values.
However, it said meeting the requirements for separate taxation on dividend income was a surprise. Korea Investment Holdings announced an annual cash dividend with a common stock dividend per share (DPS) of 8,690 won. This exceeds the 7,000 won estimated by Samsung Securities.
Jeong said, "On a consolidation basis, the dividend payout ratio is 25.1%, meeting the separate taxation requirement," and added, "Even under a conservative estimate assuming a year-over-year earnings decline, a return on equity (ROE) of 14.2% ranks among the top in the industry."
Jeong also said that because there had been a discount stemming from previously passive dividends, the gap with higher-valuation peers is expected to narrow going forward.