Eugene Investment & Securities on the 23rd said Hecto Financial is continuing revenue growth in cash payment services and the electronic payment agency institutional sector. It maintained a "Buy" recommendation and raised the target price to 50,000 won from 23,000 won. Hecto Financial's closing price in the previous trading day was 40,000 won.
In the fourth quarter last year, on a consolidation basis Hecto Financial posted revenue of 51.2 billion won and operating profit of 3.6 billion won, extending its double-digit year-over-year revenue growth for five consecutive quarters.
Park Jong-seon, an analyst at Eugene Investment & Securities, said, "For last year, revenue was 187.4 billion won and operating profit was 15.6 billion won, up 17.7% and 17.2%, respectively, from a year earlier," and added, "What is positive is that steady revenue growth has continued since its founding, and last year it achieved record-high revenue and operating profit."
Hecto Financial's revenue was driven by simple cash payment services and the electronic payment agency (PG·Payment Gateway) institutional sector performance.
Park said, "The drivers of last year's revenue growth were an increase in 'my account' payment services following the expansion of global services, with simple cash payment service revenue rising 26.4% year over year and returning to growth after three years," and analyzed, "PG service revenue also increased 15.5% year over year, maintaining growth for seven consecutive quarters."
He added that the effect of incorporating new subsidiaries through mergers and acquisitions (M&A) is also continuing.
Eugene Investment & Securities also expects Hecto Financial's revenue to likely increase this year, centered on cash payment services.
Park explained, "As the scope of high-margin services such as 'my account' payment expands on the base of newly onboarded merchants brought in through the cross-border settlement business, revenue growth in simple cash payment services is expected to continue."
For this year, it forecast Hecto Financial's results at revenue of 213.4 billion won and operating profit of 19.2 billion won. Those figures are up 13.9% and 23.4%, respectively, from a year earlier.