[Edaily Reporter Kim Kyung-eun ] On the 23rd, SKSecurities lowered its target price for KIWOOM Securities(039490)by 15.7%, from 593,000 won to 500,000 won, reflecting a decline in brokerage market share and rising cost pressures. However, it maintained its “Buy” rating, citing benefits from increased stock market trading volume and the company’s attractive dividend yield.

SKSecurities projected that KIWOOM Securities’ net income attributable to controlling shareholders for the second quarter of this year would reach 509.3 billion won, representing a 64.4% increase year-over-year and a 6.9% increase quarter-over-quarter, in line with market consensus.

Jang Young-im, an analyst at SKSecurities, noted, “Improved earnings will be driven by increases in brokerage and asset management profits, fueled by the strong stock market.”

Brokerage commission revenue is estimated at 462.7 billion won, up 26.5% from the previous quarter, driven by an increase in average daily trading volume. However, as the market continues to focus on large-cap stocks, KIWOOM Securities’ brokerage market share (M/S) is expected to decline from the previous quarter, resulting in growth that falls short of the overall market’s trading volume growth rate.

Trading profit is projected to reach 277.1 billion won, a 13.4% increase from the previous quarter, driven by contributions from the exchange-traded fund (ETF) liquidity provider (LP) and proprietary trading (PI) segments. The analysis noted that equity investment performance, particularly in semiconductor stocks, was robust, and that the impact of interest rate fluctuations was relatively limited due to a lower proportion of bond investments compared to competitors.

Conversely, the investment banking (IB) division is expected to continue underperforming, as a lack of traditional IB deals and large-scale real estate project financing (PF) transactions will limit revenue to fees primarily derived from refinancing. Selling, general, and administrative expenses are also projected to rise by 13.8% compared to the previous quarter due to factors such as an increase in education taxes, which is expected to increase the cost burden.

SKSecurities cited weakened brokerage competitiveness and rising costs as the reasons for lowering its target price.

Analyst Jang explained, “With the recent market trend favoring large-cap stocks, the brokerage market share is declining, and given the high proportion of the ETF market-maker (LP) business, the burden of the education tax has increased significantly more than at other securities firms, making it difficult to assign the same premium as in the past.” He added, “The shortage of retail credit limits also persists.”

However, he noted, “As the securities firm set to benefit most from the expansion in trading volume, and with this year’s expected dividend per share (DPS) at 18,500 won—which is projected to yield a dividend yield of 6.1%—the dividend payout ratio could rise to around 35% next year, considering the company’s plan to enhance corporate value by increasing the total dividend payout by 10%.”

He continued, “While projected net income for 2026 is 1.7 trillion won and return on equity (ROE) is expected to reach 23.5%, the price-to-book (P/B) ratio is only around 1x, so valuation pressure is not significant,” "Although the company’s recent launch of a retirement pension business and efforts to regain market share are positive developments, we need to wait and see how these initiatives perform," he added.