WealthSpot And Sharekhan Integration Will Unlock Asia's Wealth Shift

Key Takeaways

• Aggressive international expansion, tech integration, and strategic acquisitions are set to rapidly boost Mirae's market share, margins, and recurring revenues across key global markets.
  
• Mirae's scale, cross-border leadership, and digital focus position it to outperform peers despite industry consolidation and evolving asset management trends.
  
• Growing industry competition, regulatory burdens, and exposure to cyclical markets threaten Mirae Asset Securities' profitability, heighten earnings risk, and require costly adaptation to shifting investment trends.

Catalysts

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

• Analyst consensus expects increased contributions from the Sharekhan acquisition in India, but this likely understates the magnitude; with only one month of results in 2024, full-year integration and aggressive capital investments could rapidly accelerate revenue and market share, unlocking far higher long-term earnings potential as Mirae leverages first-mover scale in a surging financial market of 1.4 billion people.
  
• While analysts broadly believe that AI-driven wealth management and pension offerings will lift margins, the company's integration of group-wide AI via WealthSpot, combined with digital-first global expansion and rapid pension asset growth, could deliver a step-change in net margins and sustainable high single-digit to double-digit fee income growth as operational efficiency and cross-selling accelerate at scale.
  
• The surge in overseas stock brokerage, now outpacing domestic brokerage for the first time and seeing 72% year-over-year asset growth, positions Mirae as the dominant beneficiary of Asia's growing middle class and international investment appetite, driving structural multi-year revenue expansion and more resilient fee-based profitability.
  
• Mirae's continued focus on cross-border asset management, ETF leadership, and expansion into alternative investments further insulates against local market headwinds and taps into the global shift toward index, passive, and sustainable investment products, supporting higher recurring revenues and segment-leading margins going forward.
  
• With the ongoing consolidation of the securities industry and Mirae's well-capitalized, tech-enabled infrastructure, the company is positioned not just to defend but to aggressively gain market share, which can drive operating leverage and robust long-term earnings growth at a rate not yet reflected in current valuations.

Mirae Asset Securities Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Mirae Asset Securities compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Mirae Asset Securities's revenue will decrease by 45.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 5.0% today to 74.6% in 3 years time.
• The bullish analysts expect earnings to reach ₩1749.1 billion (and earnings per share of ₩3117.58) by about July 2028, up from ₩727.6 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 14.1x on those 2028 earnings, down from 15.9x today. This future PE is lower than the current PE for the KR Capital Markets industry at 18.7x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.86%, as per the Simply Wall St company report.

Mirae Asset Securities Future Earnings Per Share Growth

Risks

• The rapid shift toward passive investing and increased ETF adoption could erode demand for Mirae Asset Securities' active brokerage services, leading to sustained pressure on commission-based revenue and reducing the company's ability to maintain its historical revenue growth rates.
  
• Industry-wide fee compression and intense competition from both established financial institutions and fintech startups threaten to commoditize core capital market services, making it harder for Mirae Asset Securities to preserve net margins and overall profitability in its primary revenue streams.
  
• Mirae Asset Securities' aggressive international expansion strategy, exemplified by the acquisition of Sharekhan in India and growth in emerging markets, exposes the company to significant operational, regulatory, and integration risks, potentially resulting in future earnings volatility or one-time losses that could drag down consolidated earnings.
  
• The company's concentrated exposure to cyclical business segments such as brokerage, wealth management, and proprietary trading leaves it highly vulnerable to market downturns, shifts in risk appetite from aging populations, or prolonged periods of low trading activity, thus increasing unpredictability in earnings and pressuring long-term profitability.
  
• Ongoing regulatory tightening around data security, financial product oversight, and sustainable finance is likely to increase compliance costs and operational burdens, which could erode net margins and require ongoing investments that dilute returns on equity over the long term.

Valuation

• The assumed bullish price target for Mirae Asset Securities is ₩26489.1, which represents two standard deviations above the consensus price target of ₩16781.82. This valuation is based on what can be assumed as the expectations of Mirae Asset Securities's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩28000.0, and the most bearish reporting a price target of just ₩10500.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₩2344.4 billion, earnings will come to ₩1749.1 billion, and it would be trading on a PE ratio of 14.1x, assuming you use a discount rate of 9.9%.
• Given the current share price of ₩20150.0, the bullish analyst price target of ₩26489.1 is 23.9% 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.