E.Sun Financial Holding Co (玉山金控) is likely to see its earnings growth slow this year, following its completion of a capital injection scheme on Friday last week, Yuanta Securities Co (元大證券) said yesterday.
E.Sun Financial earnings are expected to increase by an annual rate of 8.2 percent this year, compared with the 14.8 percent expansion seen last year and the 88.5 percent jump the firm recorded in 2012 on the back of strong fee income growth, Yuanta analyst Peggy Shih (施姵帆) wrote in a note yesterday.
E.Sun Financial posted NT$3.76 billion (US$124.4 million) in net profit, or NT$0.66 in earnings per share, in the period from January to last month, the company said in a filing with the Taiwan Stock Exchange last week.
In the first quarter of the year, E.Sun Financial’s fee income grew 14.8 percent on an annual basis, slightly underneath the lower end of the growth target range of between 15 and 20 percent set by the company’s management.
Overall loan growth of 2.3 percent quarter-on-quarter in the first quarter was lower than market expectation, but management has guided that loan growth can still be above 10 percent year-over-year this year.
With 2.45 million credit cards in circulation across the nation as of the end of March, E.Sun Financial ranked as Taiwan’s third-largest credit card issuer in the first quarter.
“Since E.Sun Financial’s share of the credit card market has already met its target of a 10 percent stake and taking into account the high base of its bancassurance business last year, we expect the company’s fee income growth to slow this year,” Shih said.
“In addition, the issuance of 700 million new shares will lower its earnings per share growth to about 8 percent for the year,” she added.
Yuanta lowered its target price on E.Sun Financial stock to NT$19 from NT$19.2 after factoring in the 12 percent share dilution from the issuance and revised its earnings estimates to NT$1.5 per share for this year and NT$1.52 next year.
E.Sun Financial shares fell 0.54 percent to NT$18.45 yesterday on the Taiwan Stock Exchange and have underperformed the broader market by nearly 9 percent so far this year.
On Friday, the company said it had completed the issuance of 700 million new shares, taking in NT$10.5 billion in new capital, which would increase its banking unit's tier-1 capital adequacy ratio by one percentage point to 9.5 percent.
The company plans to inject NT$9.56 billion of the new capital into E.Sun Commercial Bank (玉山銀行) to finance the establishment of a subsidiary in Shenzen, China and invest the remaining NT$940 million in E.Sun Securities Co (玉山證券) to develop the unit’s overseas security unit business, E.Sun Financial said.
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