[Weekend Money] "Strong Prospects for Both Growth and Dividends" — This Company Achieves Long-Awaited Milestone After 9 Years

Target Price Set at 146,000 Won with 'Buy' Rating... Sector 'Top Pick'
Samsung Securities Receives Commercial Paper License After 9 Years
“Solid Growth in Wealth Management Business Centered on High-Net-Worth Clients” Emerges as a Strength

“Both the prospects for growth and dividends feel reassuring.”

Hyundai Motor Securities has initiated coverage on Samsung Securities, which recently received regulatory approval for commercial paper issuance for the first time in nine years, setting a ‘Buy’ investment rating and a target price of 1,460,000 won.

According to Hyundai Motor Securities on September 12, the target price of 1,460,000 won for Samsung Securities implies a 67.0% potential upside from the closing price on September 10.

Seonghun Kim, a research analyst at Hyundai Motor Securities, stated, “While all business divisions will undergo earnings adjustments in the third quarter due to a decrease in average daily transaction volume and a deterioration in securities-related profit and loss, we expect continued improvement of mid-to-long-term fundamentals driven by solid growth in the wealth management (WM) business focused on high-net-worth individuals, as well as additional profit growth engines such as commercial paper issuance and integrated accounts for foreign investors.”

The consolidated controlling net profit for Samsung Securities this year is projected at 1.7 trillion won, marking a 67.1% increase from the previous year. The return on equity (ROE) is estimated at 19.3%.

Kim added, “Samsung Securities’ competitiveness in WM continues to grow rapidly, centered on more than 570,000 high-net-worth clients and family offices. As of the second quarter, the retail client assets under custody exceeded 100 trillion won. The notable growth in wrap accounts and retirement pensions is expected to further expand stable recurring revenue streams, which will enhance the company’s earnings and the stability of shareholder returns going forward. WM profit is projected to increase by 136.7% year-on-year and is expected to steadily increase its proportion within operating revenue in the future.”

The first product following the commercial paper license is expected to launch in September. On September 9, the Financial Services Commission announced that it had granted final approval for Samsung Securities’ commercial paper (short-term financing) business in accordance with Article 360 of the Financial Investment Services and Capital Markets Act.

It has been about nine years since Samsung Securities last obtained approval for commercial paper issuance, following its designation as a comprehensive financial investment business in 2017. At that time, the eligibility review was put on hold due to shareholder-related legal proceedings, resulting in the denial of approval, and the subsequent year, a dividend incident led to a regulatory penalty and another failed attempt.

Commercial paper refers to products with a maturity of one year or less that are issued by securities companies designated as comprehensive financial investment businesses with at least 4 trillion won in equity capital, based on their own credit. Issuance is permitted up to 200% of equity. As it enables large-scale, stable funding, it is considered a core business for major investment banks (IBs). Given that Samsung Securities’ equity capital was about 8 trillion won as of the end of June, applying the 200% ceiling would mean approximately 16 trillion won in potential funding capacity.

Kim forecast, “The commercial paper product is scheduled to launch within September. Building on strong retail channel competitiveness, Samsung Securities will be able to quickly establish a balance and further expand assets under management.” As of the end of June, retail assets at Samsung Securities stood at 652.4 trillion won, with the number of high-net-worth individual clients at 572,000.

Additionally, regarding the integrated accounts for foreign investors established in partnership with Interactive Brokers (IBKR), Kim explained that average daily transaction volumes are currently at several hundred billion won. He assessed, “Future product diversification, such as exchange-traded funds (ETFs), and an increase in partnership securities firms will likely have a visible impact on earnings.”

He continued, “Samsung Securities aims to achieve a mid-to-long-term dividend payout ratio of 50% and to meet the requirements for high-dividend companies. After reaching 8 trillion won in standalone equity capital in the second quarter, which is the criterion for the IMA (Integrated Investment Account) license, the market needs to watch how swiftly the company increases its payout ratio alongside the roadmap for enhancing corporate value.”

Kim concluded, “During phases of stock price correction, a reduced valuation burden and a historically high dividend yield (8.2% forecast for 2026) are expected to support the lower bound of the stock price. Amid heightened uncertainty, strong profit growth makes Samsung Securities the most preferred defensive stock in its sector,” naming it as his top pick.

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