Hyundai Motor Securities maintained its 'BUY' investment opinion on SeAH Holdings (058650) and set a target price of 193,000 won. Although the target price was lowered from the previous 214,000 won, the firm highly rated SeAH Holdings' potential for earnings growth and corporate value re-rating, citing this year's improved subsidiary performance and proactive shareholder return policies.

Cancellation of 187,000 Treasury Shares Worth 23.9 Billion Won... 'A Value-up Signal'

SeAH Holdings decided to cancel 187,000 treasury shares acquired through a tender offer, amounting to approximately 23.9 billion won. In May, the company decided on a tender offer for up to 187,000 treasury shares, and in June, after acquiring the full planned volume through the tender offer, it confirmed the cancellation of those shares.

The market views the treasury share cancellation as a signal of SeAH Holdings' value-up efforts, as it reduces the number of issued shares and raises per-share value for existing shareholders as a shareholder return measure.

First-Half Earnings Near Last Year's Full-Year Results... Q2 Operating Profit Up 119.9%

Earnings trends also support this view. According to recent securities industry assessments, SeAH Holdings' first-half operating profit and net profit this year approached last year's full-year results. Second-quarter revenue was tallied at 2.0236 trillion won, up 19.3% year-on-year, while operating profit rose 119.9% to 98 billion won.

Hyundai Motor Securities projected that such improvement in subsidiary earnings will lead to increased earnings for SeAH Holdings as the holding company. It also assessed that the company currently trades at a P/B of around 0.2x, offering undervalued appeal relative to asset value.

Target Dividend Payout Ratio Above 60%... 50 Billion Won in Treasury Share Purchases and Cancellations from 2026 to 2028

SeAH Holdings has also laid out plans to expand shareholder returns over the mid to long term. Under its corporate value enhancement plan, the company targets paying dividends of more than 60% of separate net profit and aims to achieve 50 billion won in treasury share purchases and cancellations from 2026 to 2028.

Remaining Challenges... Consolidated Earnings Reflection and Trading Liquidity

However, with the target price lowered from 214,000 won to 193,000 won, it remains to be seen how much the improvement in subsidiary earnings will actually be reflected in consolidated results and how quickly the undervaluation will be resolved. Along with the per-share value improvement effect from the treasury share cancellation, trading liquidity due to the low number of floating shares is also cited as a variable.

[Stock prices may exhibit heightened volatility depending on corporate performance, industry conditions, merger terms, market supply and demand, and other factors. Securities firms' analyses and forecasts may differ from actual future results and do not guarantee returns on specific stocks. Before making investment decisions, it is necessary to comprehensively review the company's official disclosures, financial condition, and business progress. This article is not intended to recommend the purchase or sale of any specific stock. This article was written with AI assistance.]