Kiwoom Securities said on the 24th that for NH Investment & Securities(005940), which surpassed 10 trillion won in equity capital, the estimated annual dividend yield reaches 7.7%, with dividend appeal near a record high. It maintained a Buy rating and a target price of 44,000 won. The previous day's closing price of NH Investment & Securities was 30,000 won.
NH Investment & Securities' second-quarter net income attributable to controlling shareholders rose 84% year over year to 471.9 billion won.
Ahn Yeong-jun, a researcher at Kiwoom Securities, said, "With the increase in stock market trading value continuing from the first quarter, strong brokerage results and stable trading gains and losses were key."
NH Investment & Securities' brokerage fee income rose 237% from a year earlier to 408.7 billion won. This was driven by a 288% year-over-year increase in trading value amid a booming domestic stock market in the second quarter. Commission income from consignment trading increased 268% and 133% year over year in the domestic and overseas markets, respectively.
Investment banking (IB) fee income fell 23% from a year earlier, due to a 27% decline to 93.3 billion won in debt guarantee fees, which account for most IB fee income.
Net interest income increased 14% from last year. Compared with the previous quarter, interest balance related to wealth management (WM) increased, but interest balance related to corporate loans and trading decreased.
Ahn said, "Overall, supported by asset growth, the baseline level of net interest income itself has risen."
Trading and other gains and losses rose 112% (YoY), and the company said it delivered stable results despite an unfavorable environment such as rising market interest rates.
Having recently surpassed 10 trillion won in equity capital through steady capital increases, NH Investment & Securities was expected to post a 17% return on equity (ROE) for the year.
Dividend appeal was also expected to rise. Ahn said, "Assuming a dividend per share (DPS) of 2,300 won after the recent share price correction, the estimated annual dividend yield reaches 7.7%, with dividend appeal near a record high," adding, "We judge that further share price corrections will be limited."
He added, "Along with top-line growth, earnings are expected to continue rising, and the valuation appeal is also strong."