Six out of 10 Kospi stocks to post improved Q2 earnings: analysis

Six out of 10 Korean companies listed on the main Kospi market are expected to post higher operating profit for the second quarter from the same period a year ago, adding momentum to an overall stock rebound.

According to financial data tracker FnGuide Inc. on Monday, 59.2 percent of the 196 Kospi companies with an earnings forecast by three or more brokerage houses are projected to see improved operating profit for the April-June period.

Of the 116 companies, 95 are expected to see their second-quarter earnings profit surge from the same period a year ago, including SK D&D Co. at 1,722.6 percent, Nongshim Co. at 701.9 percent and Hanall Biopharma Co. at 418.4 percent.

Twelve stocks, including Amorepacific Corp. and Samsung Heavy Industries Co., are projected to swing into the black. Korea Electric Power Corp. (KEPCO), Emart Inc., and Hyundai Mipo Dockyard Co. are projected to narrow losses.

Big-cap stocks, in particular, have better earnings prospects for the second quarter.

Out of the top 20 listed companies based on market capitalization, 14 are projected to announce higher operating profit for the second quarter compared to the same period last year.

LG Energy Solutions Ltd is anticipated to achieve the highest growth rate in operating profit, with an estimated surge of 254.8 percent to reach 694.1 billion won ($527.3 million) from last year.

Despite a decline in metal prices that affects selling prices in the small battery segment, the company witnessed increased sales of medium and large-sized batteries, particularly in North America.

In addition, the anticipated impact of the production tax credit (AMPC) under the U.S. Inflation Reduction Act (IRA) is also expected to contribute to its positive performance.

Another significant player in the secondary battery sector, POSCO Future M Co., is projected to report a 29.8 percent rise in second-quarter operating profit at 71.7 billion won.

The automotive industry is anticipated to exhibit strong performance during the second quarter.

Hyundai Motor Co. and Kia Corp. are projected to report an operating profit of 3.68 trillion won (21.1 percent) and 2.98 trillion won (33.4 percent), respectively, driven by the continued expansion of their sales in North America.

Hyundai Mobis Co. is also expected to achieve a profit of 628.9 billion won, up 55.9 percent from a year ago.

[Photo by Park Hyung-ki]

LG Electronics Inc., with an operating profit of 1.5 trillion won in the first quarter, is estimated to record an operating profit of 959.9 billion won in the second quarter.

Although the estimate represents a decline of 35.9 percent from the previous quarter, it still reflects a significant increase of 21.2 percent on year.

The combined operating income for listed companies in the second quarter is expected to reach 33.9 trillion won, which marks a decrease of 44 percent on year but a notable increase of 13.6 percent compared to the first quarter.

Local brokerage firms anticipate a positive turnaround as growth momentum for earnings is expected in the second quarter.

Following a peak of 2,650.45 on March 12, the Kospi index failed to sustain its gains and closed at the 2,550 range on March 30.

“The first-quarter earnings data proved that Kospi reached its lowest point, which led to indications of a Kospi rebound,” said Yang Hae-jeong, an analyst at DS Investment & Securities Co. “The earnings for the second quarter will continue an upward trajectory, and none of the country’s sectors, except the semiconductor, will fall into a worse prospect.”

“Lower earnings year over year will continue in the second quarter, but enterprises will find the economy more favorable as commodity prices remain low, and producer prices are falling faster than consumer prices,” Kim Min-gyu, a market expert at KB Securities Co.

Large chipmakers, which are major players in the Korean stock market, are expected to post still sluggish yet better earnings in the second quarter.

Samsung Electronics Co. is projected to report a significant decline in second-quarter operating profit, reaching 237.5 billion won, down 98.3 percent from a year ago.

SK hynix Inc. is expected to fall into the red, with an estimated loss of 2.98 trillion won.

Market insiders, however, expected the two chip stocks to demonstrate better performance in the third and fourth quarters.