DEEP RESEARCH · MIRAE ASSET SECURITIES/ROE IMPROVEMENT
[Mirae Asset Securities] ROE improvement through overseas business_52-week high
Reviewing the 52-week-high thesis through ROE recovery, overseas real estate cleanup, shareholder returns, and global business repositioning
0. Bottom line first
The reason Mirae Asset Securities has reached a 52-week high unlike many other brokerage peers is not just an industry rebound. I think the market is responding to several factors at once: overseas real estate losses being cleaned up, a 10% ROE target, share cancellations and higher dividends, and a repositioning of the global business.
This is not a buy or sell recommendation. I am recording this for myself to review later. I researched it on a Sunday at a cafe with my daughter, while grading her workbook and searching online.
Interpretation: If commercial law reform actually moves forward, the domestic securities industry could become more active, so I think this is a time to watch brokerages. Among them, Mirae Asset Securities is already getting differentiated market attention through a 52-week high.
1. Five-year earnings trend and ROE recovery
Official fact: Mirae Asset Securities delivered record-level results during the post-COVID bull market in 2020-2021. In 2021, controlling shareholder net income was about KRW 1.15 trillion and ROE reached 11%.
Official fact: In 2022, net income fell sharply to about KRW 639.5 billion due to global rate hikes and impairments on investment assets, and ROE dropped to around 6%. The main reason for the ROE decline was provisions and valuation losses on alternative investment assets, including overseas real estate.
Official fact: In 2023, some of the negative factors eased and results rebounded. Operating profit rose 122% year over year to KRW 1.159 trillion, and net income rose 68% to KRW 893.7 billion, putting the company close to the KRW 1 trillion club again.
Interpretation: ROE at the end of 2023 appears to have improved to the high single digits. The company's 2024 corporate value-up plan, which sets consolidated ROE of 10% as a mid-term target, is also a reason the market has begun to re-examine profitability recovery.
| Period | Key source figure | Meaning |
|---|---|---|
| 2021 | Controlling shareholder net income about KRW 1.15tn, ROE 11% | Peak profitability from the bull market |
| 2022 | Net income about KRW 639.5bn, ROE around 6% | Impact from rate hikes and alternative investment losses |
| 2023 | Operating profit KRW 1.159tn, net income KRW 893.7bn | Earnings rebound as negative factors eased |
| Mid-term target | Consolidated ROE 10% | Core target of the corporate value-up plan |
2. Overseas real estate and alternative investment risk cleanup
Official fact: Mirae Asset Securities had aggressively expanded overseas commercial real estate and other alternative investments, but this became a drag during the 2021-2022 rate-hiking period. After the pandemic, lower office leasing demand and higher rates reduced the value of overseas real estate, including U.S. properties, and significant valuation losses began in 2022.
Official fact: In 2023 alone, the company reflected about KRW 340 billion of overseas real estate impairment losses and cleaned up a large amount of impaired assets. At the end of 2023, remaining overseas commercial real estate exposure had been reduced to about KRW 1.4 trillion.
Official fact: An office building in Dallas, Texas, which Mirae Asset Securities had acquired in 2016 for about KRW 978.6 billion, was sold around the end-2023 fund maturity for about KRW 787.9 billion. The company realized an approximately 30% loss due to COVID-19 effects and falling real estate prices.
Interpretation: The losses are painful, but from a market perspective, it matters that the long-standing burden has been recognized in the numbers. If additional overseas real estate losses are limited and some asset values recover as rates decline, Mirae Asset Securities can expand global IB again with lower alternative investment risk.
About KRW 340bn in 2023
The company reflected overseas real estate impairment losses and cleaned up impaired assets.
About KRW 1.4tn
This was the remaining overseas commercial real estate exposure at the end of 2023.
KRW 978.6bn → KRW 787.9bn
The asset was bought in 2016 and sold at end-2023, realizing an approximately 30% loss.
Overseas assets in pension assets are expanding.
3. Shareholder returns and improved capital policy
Official fact: Mirae Asset Securities' shareholder return policy has strengthened significantly in recent years. In the past, the payout ratio stayed in the low-to-mid 20% range and dividend yield was only in the mid-3% range, but since late 2022 the company has actively repurchased and cancelled shares while expanding dividends.
Official fact: For fiscal year 2024, based on 2023 results, the company decided on a cash dividend of KRW 250 per common share and cancelled about 15 million treasury shares. Including dividend payments of about KRW 146.7 billion and cancelled shares valued at KRW 136.9 billion, total shareholder returns were KRW 367.0 billion, and the total return ratio reached about 39.8%.
Official fact: The company also cancelled 10 million common shares in November 2024. In the corporate value-up plan announced at the end of 2022, it disclosed a short-term shareholder return target of at least 35% and a mid-to-long-term target to cancel more than 100 million issued shares. Since 2018, it has purchased KRW 982.9 billion of treasury shares and already cancelled KRW 653.5 billion of them.
Interpretation: Returning a large portion of net income to shareholders while reducing surplus capital also helps ROE. Buybacks and cancellations can raise EPS and manage equity capital at a more appropriate level, supporting PBR improvement and corporate value re-rating.
| Policy item | Source figure | Investment view |
|---|---|---|
| Cash dividend | KRW 250 per common share | Higher dividend |
| Share cancellation | About 15 million shares | Lower share count |
| Total shareholder return | KRW 367.0bn, total return ratio about 39.8% | Return ratio comparable to large banks |
| Long-term cancellation target | More than 100 million issued shares | Continued capital-efficiency intent |
Major shareholders.
4. Investment philosophy and CEO transition
Official fact: Mirae Asset Securities' investment philosophy is rooted in founder Park Hyeon-joo's global orientation and pursuit of innovation. Park has been active in overseas investing based on the belief that the firm should seek opportunities in global markets rather than remain domestic, and he has made clear that management will not be inherited by his children but run by professional managers.
Official fact: Mirae Asset Securities operates in 11 countries, the highest among Korean brokerages, with 14 overseas subsidiaries and 3 offices. Over the past five years, it has pursued overseas M&A including the 2018 acquisition of U.S. ETF manager Global X, a 2022 acquisition of an Australian ETF manager, and the 2023 acquisition of Sharekhan, India's No. 10 local brokerage.
Official fact: In November 2023, the company completed the acquisition of India's Sharekhan with an investment of about KRW 586.6 billion. The India subsidiary already generated KRW 16.6 billion in pre-tax profit in 2024.
Official fact: At the end of 2023, Choi Hyun-man, who had served as CEO for seven years, stepped down, and Vice Chairman Kim Mi-seob and Vice President Huh Sun-ho were appointed as co-CEOs. Kim is a former executive in charge of global business, while Huh is known as an execution-oriented manager with experience across core businesses including WM.
Official fact: After the two-CEO structure began, cumulative net income through the third quarter of 2023 rose 45.1% year over year to KRW 661.8 billion, and operating profit approached KRW 1 trillion.
5. Board, macro environment, and investor assessment
Official fact: Park Hyeon-joo stepped down from the registered director role at Mirae Asset Securities in 2018 and moved into a second-line role focused on overseas business strategy. After the generational transition at the end of 2023, the current board includes co-CEOs Kim Mi-seob and Huh Sun-ho, management, and multiple outside directors.
Official fact: Ahead of the March 2024 annual shareholder meeting, the company appointed global finance expert Dr. Moon Hong-sung as a new outside director. He previously worked at Korea's Ministry of Economy and Finance and the IMF.
Interpretation: A higher outside-director ratio and stronger expertise can reinforce transparency and checks and balances, helping prevent repeats of past mistakes such as excessive alternative-investment risk exposure.
Official fact: Domestically, liquidity that had tightened since late 2022 eased after 2023, and stock market trading value began increasing, improving the brokerage industry environment. Expectations for rate cuts are also reducing pressure on brokerages.
Official fact: According to Hankyung promotional news cited in the source, during one month in the second half of 2024, foreign investors net bought about 340,000 shares of Mirae Asset Securities, and institutions net bought more than 4 million shares, while retail investors sold heavily.
Official fact: Major research houses including Daishin Securities projected that although Mirae Asset Securities' profitability depends heavily on the direction of interest rates, the overseas real estate burden is nearly finished and interest expense pressure should gradually ease, making it possible for 2025 net income to exceed KRW 1 trillion.
Interpretation: Global investors appear to view positively the combination of growth options in emerging markets such as India and continued financial soundness through capital ratio and leverage management. As macro changes and domestic and overseas investor re-rating overlap, Mirae Asset Securities' share price has outperformed peers.
6. My checklist
- Whether consolidated ROE can reach the 10% target in the corporate value-up plan
- Whether the remaining overseas real estate exposure of about KRW 1.4 trillion produces additional losses
- The execution pace of the 35%+ shareholder return ratio and the target to cancel more than 100 million issued shares
- How far the India subsidiary can expand profit after Sharekhan, from KRW 16.6 billion in pre-tax profit
- Whether rate-cut expectations and higher domestic trading value translate into actual brokerage and trading profit
Sources
- Original post: https://m.blog.naver.com/PostView.naver?blogId=star_of_self&logNo=223797999410
- Reference materials cited in the original post: domestic and overseas securities analyst reports and media coverage, shareholder value enhancement plan