Korea Inc. likely to enjoy post-pandemic boom in 2021

As Korea Inc. overall is expected to do more than 40 percent better than last year’s estimated performance, investors recommend shipbuilding, telecommunication devices and semiconductor and department store stocks as big winners for this year.

According to Seoul-based market tracker FnGuide on Sunday, a combined operating profit of 273 listed companies in Korea that have their earnings estimated by more than three securities firms would reach 182.85 trillion won ($166.8 billion) this year, up 40 percent or above from estimated 130.4 trillion won in 2020 and 122 trillion won in 2019. Market analysts are particularly positive for economically sensitive stocks and value stocks such as semiconductor, oil refinery, chemical, construction, shipbuilding, steel and metal.

“Investors are likely to grow wary of overvalued stocks and go for undervalued ones this year,” said DB Financial Investment in a recent report, adding that the year 2021 will mark the beginning of the golden age of value investing.

Shipbuilding is one of the sectors that will lead the growth as the industry is slowly recovering from long-stretched recession. Korea Shipbuilding & Offshore Engineering recently won a 900 billion won worth order for six very large container ships and Samsung Heavy Industries also secured a deal worth 199.3 billion won to build a liquefied natural gas (LNG) carrier. Market experts predict Korean shipyards’ operating profit to grow 320 percent in 2021 from a year earlier.

Department stores are expected to see around 166 percent on-year increase in operating profit this year, joining the list of industries that are likely to see post-pandemic profit growth including hotel, leisure, aviation service and display industries.

Analysts forecast that operating profit of the nation’s top market-cap Samsung Electronics to gain 27 percent from last year, with that of Hyundai Motor expected to grow 135 percent, SK Hynix 74 percent, LG Chem 35 percent and Naver 22 percent.

LG Display, OCI, SK Innovation, Hotel Shilla and S-Oil that are estimated to have generated losses last year will be able to turn around this year. LG Display’s operating loss is projected at 471.8 billion won for 2020, but the panel maker is expected to reap 612 billion won in operating profit, according to analysts. Kim Young-woo, a researcher from SK Securities, predicted a bright outlook for LG Display this year because sales of Apple’s iPhone 12 remain strong and LCD supply shortage is likely to continue until the first half.

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