Analysts said profitability is expected to improve at NH Investment & Securities with the launch of its integrated investment account (IMA) business.
DB Securities on the 6th maintained a "buy (BUY)" rating on NH Investment & Securities and raised its target price to 39,000 won from 30,000 won. The previous trading day's closing price was 29,950 won.
DB Securities projected that NH Investment & Securities' net income attributable to controlling shareholders this year will rise 27.7% on-year to 1.3 trillion won. It presented return on equity (ROE) at 13.5%, up 1.7 percentage points from a year earlier.
By business line, it said brokerage commissions will increase 60.2% on the back of higher average daily transaction value. In addition, asset management (WM) fees will rise 9.8%, interest profit and loss will climb 18.6% on expanded margin financing balances, and investment banking (IB) fees will grow 9.2% due to deal concentration at large players such as Kbank.
Na Min-uk, an analyst at DB Securities, especially projected that the leverage expansion effect following IMA license approval will drive future earnings growth. NH Investment & Securities received approval in March as the third IMA operator in Korea and launched its first product totaling 400 billion won at the end of the same month
Na said, "The expected fundraising this year is about 2 trillion won, and related management revenue will be around 14 billion–20 billion won," adding, "Given ample room to expand leverage through last year's 650 billion won capital increase, ROE improvement is expected through active IMA-based management."