Mirae Asset Securities recorded over 1 trillion KRW in Q2 valuation gains from its SpaceX investment but now faces potential large-scale Q3 losses as the stock dropped 27% since June 30. SpaceX closed at $123.99 on July 17 (local time), down from $170.86 on June 30 and below its $135 IPO price from last month. The reversal stems from Mirae Asset's FVPL accounting classification, which requires quarterly mark-to-market revaluation with changes flowing directly into the income statement.
Mirae Asset's Q2 SpaceX Book Value Reaches 4.8-5 Trillion KRW
Mirae Asset Securities classifies its SpaceX stake as a fair value through profit or loss (FVPL) financial asset. CFO Lee Kang-hyuk stated in the Q1 earnings call in May that the acquisition cost totaled approximately 800 billion KRW domestically and internationally, with Q1-end book value at approximately 3.3 trillion KRW. Lee projected an additional 1.3 trillion KRW in Q2 valuation gains if SpaceX listed at its target valuation of $175 billion. Multiple securities firms estimated Q2 additional gains at 1.5-1.7 trillion KRW, bringing Q2-end book value to an estimated 4.8-5 trillion KRW. Q1 proprietary investment fair value gains of approximately 804 billion KRW came largely from SpaceX, and mid-1 trillion KRW in Q2 gains drove the Q2 controlling shareholder net profit consensus to 1.5098 trillion KRW.
Q3 Estimated Loss Approaches 1.3 Trillion KRW Based on 27% Decline
The FVPL structure converts price declines directly into losses. Applying the 27% decline to the Q2-end book value of 4.8-5 trillion KRW yields an estimated Q3 valuation loss of approximately 1.3 trillion KRW. KB Securities noted in a report on June 30 that a 10% SpaceX price movement equals Mirae Asset Securities' quarterly net profit on a standalone basis. The Q3 controlling shareholder net profit consensus stands at 586.9 billion KRW, down 61% from Q2, though most estimates predate the recent price drop.
Lockup Expiration and Consensus Downgrade Risks Remain
NH Investment & Securities stated in a report on July 8 that lockup release is concentrated in August with no profit-taking plans announced yet. Large-scale lockup expiration could add downward pressure on the stock. Consensus estimates compiled before the price decline may face further downward revisions if the stock remains at current levels or falls further.
Analysts Cut Target Prices Amid Volatility Concerns
SK Securities researcher Jang Young-im lowered the target price to 51,000 KRW on July 15, stating that earnings volatility tied to a single stock's price level constitutes a clear discount factor regardless of profit or loss. NH Investment & Securities cut its target from 110,000 KRW to 70,000 KRW. iM Securities noted in a report on July 6 that stock dividends implemented at year-end have limited effectiveness in enhancing shareholder value compared to cash dividends or share buybacks and cancellations.
Mirae Asset Reaffirms Long-Term Hold Strategy
Mirae Asset Securities stated that short-term price volatility following the IPO and lockup release is an expected market factor. The company said it highly values the core business and mid-to-long-term growth potential and plans to maintain holdings from a long-term perspective. The firm added that as a financial investor with a low acquisition cost and stable earnings from wealth management and overseas business, it has a structure capable of managing risks from specific stock price movements. No decision has been made regarding dividend policy or size related to large-scale unrealized gains. The low acquisition cost serves as the overall investment breakeven reference but does not mitigate quarterly earnings recognition under FVPL — declines from the prior quarter-end book value are recorded as losses in the current quarter regardless of acquisition cost.
FAQ
What caused Mirae Asset Securities' Q3 loss risk from SpaceX?
SpaceX stock dropped approximately 27% from $170.86 on June 30 to $123.99 on July 17 (local time). Mirae Asset's FVPL accounting requires quarterly mark-to-market revaluation, converting the 27% decline on an estimated Q2-end book value of 4.8-5 trillion KRW into an estimated Q3 loss of approximately 1.3 trillion KRW.
How much did analysts cut Mirae Asset Securities' target price?
SK Securities lowered the target to 51,000 KRW on July 15, citing earnings volatility as a discount factor. NH Investment & Securities cut the target from 110,000 KRW to 70,000 KRW.
What is Mirae Asset's strategy for its SpaceX holdings?
The company stated it plans to maintain holdings from a long-term perspective, valuing SpaceX's core business and mid-to-long-term growth. No decision has been made on dividend policy related to unrealized gains.
