Global Expansion And AI Focus Will Strengthen Future Prospects

Key Takeaways

• Mirae Asset Securities aims to boost revenue and profitability through AI-driven investment tools, strategic acquisitions like Sharekhan, and asset management expansion in global wealth management.
  
• The company focuses on enhancing shareholder value with share cancellations, a dividend policy, and maintaining high return on equity through strategic investments and potential market opportunities.
  
• Heavy reliance on overseas investments and increasing competition could challenge profitability amid market volatility and regulatory risks.

Catalysts

Operates as a financial investment company in South Korea and internationally.

• Mirae Asset Securities plans to enhance its product generation capacity focused on Global Wealth Management (WM) and pension, which could drive revenue growth through client-customized comprehensive asset management and AI-driven investment data tools. This strategy aims to strengthen trading, increase asset growth, and expand revenue, potentially boosting their future revenues.
  
• The company's acquisition of Sharekhan in India, which operates 133 branches with 3.1 million customers, is expected to serve as a significant growth engine for their global business. This expansion into India's 1.4 billion population market could significantly enhance Mirae's global business profitability, impacting both revenue and earnings positively.
  
• Mirae Asset Securities is focusing on strengthening its AI competitiveness to enhance shareholder value. The integration of AI capabilities, such as AI-driven pension robo-advisors and AI trading products, aims to optimize trading strategies and asset management. This could potentially improve net margins by increasing operational efficiency and reducing costs.
  
• The company is emphasizing shareholder value enhancement through a policy of returning at least 35% to shareholders and substantial share cancellations by 2030. This initiative is likely to positively impact earnings per share (EPS) by reducing the share count, thereby potentially increasing the stock's attractiveness and valuation.
  
• Mirae's commitment to maintaining higher than 10% ROE annually, despite market challenges, through strategic investments in innovative companies and potential interest rate cuts globally, indicates a focus on improving their return on equity. This ambition involves enhancing profitability, which could elevate earnings in the future.

Mirae Asset Securities Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Mirae Asset Securities's revenue will decrease by 39.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.1% today to 34.2% in 3 years time.
• Analysts expect earnings to reach ₩1084.1 billion (and earnings per share of ₩1612.38) by about February 2028, up from ₩295.4 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 6.8x on those 2028 earnings, down from 16.0x today. This future PE is lower than the current PE for the KR Capital Markets industry at 8.7x.
• Analysts expect the number of shares outstanding to decline by 1.78% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.97%, as per the Simply Wall St company report.

Mirae Asset Securities Future Earnings Per Share Growth

Risks

• The overseas commercial real estate investments pose a risk due to their exposure to market volatility and the potential for further impairment losses, which could negatively impact net margins and earnings.
  
• A significant portion of Mirae Asset Securities' revenue growth relies heavily on overseas investments, such as those in India; however, fluctuations in international markets and regulatory environments could impact future revenues.
  
• Increasing competition in the pension and wealth management business could pressure margins and challenge profitability, affecting overall revenue from these key focus areas.
  
• Despite substantial investments in AI-driven services, rapid technological changes and competition in the AI sector may impact the company's ability to maintain or increase its revenue streams.
  
• The restructuring and cautious approach in the IB sector, along with challenges in certain market segments, may limit investment returns and impact overall profitability.

Valuation

• The analysts have a consensus price target of ₩10563.636 for Mirae Asset Securities based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩12000.0, and the most bearish reporting a price target of just ₩9200.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₩3169.1 billion, earnings will come to ₩1084.1 billion, and it would be trading on a PE ratio of 6.8x, assuming you use a discount rate of 9.0%.
  
• Given the current share price of ₩8270.0, the analyst price target of ₩10563.64 is 21.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.