This Financial Firm Is Excessively Undervalued Relative to Its Earnings Strength [Click eStock]
iM Securities Sets Target Price for JB Financial Group at 39,000 Won
On July 1, iM Securities maintained its "Buy" investment rating on JB Financial Group and set a target price of 39,000 won.
Yongjin Seol, an analyst at iM Securities, stated, "JB Financial Group possesses clear fundamental strengths, such as a top-tier return on equity (ROE) within the industry and a stable capital ratio, which enable robust shareholder returns."
However, Analyst Seol explained that the recent underperformance in earnings was driven by factors such as the impact of repo funds (leveraged bond investment funds) in the first quarter, difficulties in expecting an increase in commission profits due to the absence of a securities subsidiary, and relatively burdensome asset quality indicators and credit loss expenses. As a result, the share price has been somewhat sluggish.
![This Financial Firm Is Excessively Undervalued Relative to Its Earnings Strength [Click eStock]](http://www.asiae.co.kr/news/img_view.htm?img=2026062916285127225_1782718131.jpg)
Nevertheless, he noted, "Based on stable margin management, this year's ROE is expected to reach 13.3%, among the highest in the industry. In addition, with semiconductor investments in the Honam region, JB Financial Group's mid- to long-term profit-generating capability is also expected to remain solid. The valuation stands at only 0.8 times price-to-book ratio (PBR), and with a price-to-earnings ratio (PER) of about 6.4 times—similar to other regional banks with lower ROEs—JB Financial Group is currently in an excessively undervalued range."
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Analyst Seol forecasts that JB Financial Group's net profit for the second quarter of this year will reach 219.8 billion won, representing a 5.8% increase year-on-year, surpassing market expectations. Non-interest income is projected to be 82.8 billion won, up 7% from the previous year. He analyzed that the previously weak performance from repo funds in the first quarter will improve due to maturity and other factors, and that gains and losses from the valuation of capital company investment assets will offset the weak results. The common equity tier 1 (CET1) ratio is also predicted to increase by 0.05 percentage points from the previous quarter to 13.65%.
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