Shinhan Investment & Securities on the 8th said Meritz Financial Group is likely to stand out for its relative appeal in a phase where market volatility widens and the tilt toward growth stocks eases. It maintained a Buy rating and a target price of 133,000 won. Meritz Financial Group's previous closing price was 107,300 won.
Meritz Financial Group is actively buying back its own shares, but the stock's slump continues.
Im Hee-yeon, an analyst at Shinhan Investment & Securities, said, "The pace of the share price decline exceeds the expected decrease in shares outstanding from buybacks and cancellations," adding, "It is a period when market capitalization is shrinking faster than the per-share value enhancement through shareholder returns."
Since mid-May, Meritz Financial Group has been responding by increasing the daily application volume and purchase amount for its share buybacks. But with the stock market rally led by artificial intelligence (AI) and semiconductors extending, it is relatively being left out.
However, in a phase where market volatility expands and the tilt toward growth stocks eases, Meritz Financial Group's relative appeal is expected to reemerge, given its fundamentals' low linkage to the stock market and the presence of mechanical buying demand.
Meritz Financial Group currently has a framework to buy back and cancel treasury shares in an amount exceeding 50% of consolidated net income. The lower the share price, the more shares can be canceled.
Im said, "If stock market volatility increases, downside rigidity from supply and demand is expected to be secured," adding, "In addition, the subsidiary Meritz Securities has low reliance on brokerage commissions due to the Super365 account free-fee policy, and its profit and loss sensitivity to sudden changes in transaction value is limited."
At the group level, the exposure to marketable assets is also relatively low, suggesting the potential for limited profit damage even if the stock market corrects.
Also, assuming the shareholder return policy shifts to cash dividends starting with the settlement of accounts for 2029, the expected dividend yield would be 11%.
Accordingly, Im said, "Such an expected dividend yield will likely gain favor in periods of heightened market volatility," adding, "In a deep undervaluation phase, buybacks become more efficient, and intrinsic value is expected to accumulate over the mid to long term."