In 2020, Promising Corporate Earnings... Operating Profit of Listed Companies Increases by 25%

Average Operating Profit Estimate for 292 Listed Companies This Year at KRW 169.4312 Trillion
Expected to Increase 24.9% from KRW 132.666 Trillion Last Year

[Asia Economy Reporter Oh Ju-yeon] As expectations for improved corporate earnings among domestic listed companies grow this year, the bullish sentiment on the KOSPI is gaining more momentum. Last year, the market moved mainly on sentiment alone, causing it to falter with even minor external shocks. However, this year, it is analyzed that the upward trend will continue based on corporate earnings (fundamentals) supported by the base effect.

According to FnGuide, a financial information company, as of the 2nd, the average operating profit estimate for 292 domestic listed companies, estimated by three or more securities firms, is 169.4312 trillion KRW this year. This represents a 24.9% increase from last year's 132.666 trillion KRW, with operating profits expected to rise for 9 out of 10 companies. Only 25 companies, or 8.57% of the total, are expected to see a decrease in operating profit compared to last year.

Among them, Korea Electric Power Corporation (KEPCO) showed the largest increase in operating profit. KEPCO's operating profit is projected to surge by 5324% to 3.1675 trillion KRW this year from 58.4 billion KRW last year. This reflects the base effect following the worst-ever deficit recorded last year due to issues such as the nuclear phase-out policy. Heo Min-ho, a researcher at Shinhan Financial Investment, stated, "This year, KEPCO's performance and valuation recovery are expected due to the downward stabilization of oil and coal prices, increased nuclear power plant capacity and utilization rates, and the restructuring of the electricity tariff system," adding, "From this year, the stock price is also expected to start a gradual upward trend."

The sectors that securities firms commonly focus on this year are semiconductors and IT. This is because expectations for global economic and demand recovery are rising, and forecasts for smartphone sales volume and semiconductor revenue continue to be revised upward. This change highlights the attractiveness of the Korean economy, industry, and stock market, which are highly dependent on IT and semiconductors.

In the case of SK Hynix, last year's operating profit was 2.9131 trillion KRW, but it is expected to increase by 140.5% to 7.0056 trillion KRW this year. This figure is about 300 billion KRW higher than the estimate (6.7394 trillion KRW) projected earlier last month. Quarterly analysis suggests that the supply-demand cycle for DRAM will improve from the first quarter, and the earnings growth trend will become visible from the second quarter.

No Geun-chang, a researcher at Hyundai Motor Securities, said, "Demand for server DRAM is expanding mainly among telecom companies, with China expected to invest in 1 million base stations by this year," adding, "The fixed price for server DRAM is also expected to rebound earlier than anticipated, leading to an upward revision of SK Hynix's earnings forecast."

Samsung Electronics' operating profit this year is forecasted to increase by 39.1% to 37.7545 trillion KRW from last year's 27.1436 trillion KRW. Target stock prices have also been steadily revised upward, with Hana Financial Investment raising its target from 60,000 KRW to 63,000 KRW, and Hyundai Motor Securities from 61,000 KRW to 71,000 KRW on the same day.

Hyundai Motor is also expected to see a 33.3% increase in operating profit to 4.7331 trillion KRW this year from 3.551 trillion KRW last year, while Hyundai Mobis is projected to rise by 11.7% from 2.3679 trillion KRW to 2.6446 trillion KRW. Additionally, companies such as Samsung SDI (98.9%), Hanwha (28.5%), LG (24.6%), and SK (18.9%) are also expected to see double-digit growth in operating profits this year.

Lee Kyung-min, a researcher at Daishin Securities, said, "Global trade is also showing signs of recovery, and corporate profits are creating a gentle upward trend," adding, "Korea's leading economic indicators and 12-month forward EPS (earnings per share) recovery are becoming visible, and among major global countries, Korea is expected to experience the largest base effect in terms of fundamentals. Therefore, we anticipate a strong performance in global risk assets and stock markets this year based on fundamental momentum."

This content was produced with the assistance of AI translation services.