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Further upside to hinge on continuation of market rally

Downgrade to Hold, but lift TP to W232,000

We downgrade our rating on Kiwoom Securities to Hold (from Buy), but lift our target price to W232,000 (from W170,000), applying a 2025F target P/B of 1.0x. In its corporate value enhancement plan, management stated that the stock was undervalued at a P/B below 1.0x and pledged to conduct buybacks/cancellations until that threshold was reached. With the stock now trading near 1.0x, its undervaluation has been largely resolved based on management’s own metric. Consequently, we expect the company’s shareholder return policy to shift its focus from buybacks toward dividends. Further share price upside will likely depend on a continued market rally and a corresponding increase in BPS.

For 2Q25, we expect net profit attributable to owners of the parent to come in 35% above the consensus, supported by: 1) higher brokerage income resulting from increased trading volumes and expanded margin loan balances; and 2) improved trading income amid a bullish stock market.

We estimate net fee/commission income grew 8.4% YoY and 8.1% QoQ on a consolidated basis and 16% YoY and 8.5% QoQ on a standalone basis. This solid performance was likely driven by increased domestic stock market trading volume. (IB/other fee income was likely flat YoY and QoQ.)

Interest income likely climbed 27% YoY and 12% QoQ on a consolidated basis and 15% YoY and 5% QoQ on a standalone basis. Since loan interest represents a large portion of Kiwoom Securities’ overall interest income, the company stands to benefit significantly from expanded margin balances.

We believe trading/financial product income grew significantly YoY and QoQ on both a consolidated and standalone basis, likely thanks to strong equity market conditions.