[Click e-Stock] "Mirae Asset Securities May Face Valuation Losses in Second Half Due to SpaceX... Target Price Down"

On July 15, SK Securities reported that there is a possibility of valuation losses for Mirae Asset Securities in the second half of the year due to SpaceX, and accordingly lowered its target price from 69,000 won to 51,000 won. On the other hand, reflecting improvement in earnings fundamentals, the investment rating was raised from 'Neutral' to 'Buy'.

Youngim Jang, a researcher at SK Securities, explained, “The reason for maintaining a neutral opinion until now was due to doubts about earnings fundamentals in the core securities business, apart from gains related to the SpaceX valuation. However, I now judge that not only the earnings fundamentals of the core domestic brokerage business but also those of overseas subsidiaries are improving. In addition, the recent share price correction has reduced the valuation burden, as the 12-month forward price-to-book ratio (PBR) has dropped to 1.4 times compared to the beginning of the year.”

Regarding the downward revision of the target price, Jang stated, “We continue to use the PBR valuation model, but applied a 10% discount. SpaceX is classified as a FVPL (financial assets measured at fair value through profit or loss) asset, which acted as a significant positive factor in the first half due to large-scale valuation gains. However, considering SpaceX’s current share price, there is a possibility that a valuation loss could be recognized in the second half. Regardless of profit or loss, the volatility of earnings fluctuates greatly depending on the share price of a single stock, which is clearly a reason for the discount.” She added, “Measures to mitigate volatility are necessary under the circumstances, and as most of the SpaceX valuation gains are in the form of unrealized gains and losses, there is a possibility of stock dividends similar to last year. As a result, the predictability of cash dividends this year has declined compared to the past.”

Mirae Asset Securities’ second-quarter results this year are expected to exceed market expectations. Jang stated, “Second-quarter net profit attributable to controlling shareholders is expected to increase by 268.5% year-on-year to 1.486 trillion won, which is 7.5% above the consensus (average estimates of securities firms). Once again, this is due to large-scale valuation gains on SpaceX. With SpaceX’s closing price at the end of June at 170 dollars, the estimated valuation gain is about 1.6 trillion won. Adjusted for performance fees, it is expected to be between 1.2 trillion and 1.3 trillion won.”

Brokerage commission income is expected to increase by 25.9% quarter-on-quarter to 578.5 billion won due to solid daily average trading volume, and separate operating profit is expected to rise by 4.2%. Jang analyzed, “Although the interest rate environment was not favorable, bond investment performance likely improved compared to the first quarter. In addition, the growth of the exchange-traded fund (ETF) market likely drove performance in the market-making division.”

This content was produced with the assistance of AI translation services.