April 24, 2024

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[THE INVESTOR] LF Group’s earnings will be boosted by taking over KORAMCO Asset Management, said Korea Investment and Securities on Nov. 23 maintaining a “buy” recommendation and 36,000 won (US$31.88) target price. 

It is acquiring 50.7 percent stake in KORAMCO, the third-largest asset management firm by operating profit, for 189.8 billion won. The price is one time its price-to-book ratio based on 270 billion won equity capital as of end-September plus 40 percent premium of management control. Its operating profit accumulated by end-September has reached 63.5 billion won with net profit of 48.3 billion won, already surpassing that of 2017. The acquisition will boost LF’s operating profit next year by 38 percent to 194 billion won and net profit for controlling stake by 15 percent, said analyst Na Eun-chae.

LF has expanded its businesses and is showing strong will to diversify its operations now by entering real estate finance. Its current total market value does not even fully reflect its existing solid businesses. It is severely undervalued at 5.7 times price-earnings ratio and 0.6 times price-to-book ratio, she underlined, suggesting to purchase its stocks considering its mid- to long-term expansion. 

By Hwang You-mee (glamazon@heraldcorp.com)