Which Companies Have Raised Earnings Forecasts Amid the COVID-19 Recession?

LG Innotek Q1 Operating Profit Forecast Up 63.78%, Boosted by Strong Dollar and iPad Sales
Daewoo Shipbuilding and Nongshim Also Raise Q2 Outlook

[Asia Economy Reporter Song Hwajeong] Despite concerns that corporate earnings are inevitably expected to decline due to the novel coronavirus disease (COVID-19) crisis, some stocks are drawing attention as their earnings forecasts are being revised upward.

According to financial information provider FnGuide on the 9th, LG Innotek was the KOSPI-listed company whose Q1 operating profit consensus for this year was revised upward the most significantly over the past month. LG Innotek's Q1 operating profit estimate was adjusted up by 63.87%, from 40.785 billion KRW to 66.835 billion KRW. LG HelloVision followed with a 59.38% increase, from 6.4 billion KRW to 10.2 billion KRW. Other companies with significant upward revisions in operating profit forecasts include Hyundai Wia (39.88%), Daewoo Shipbuilding & Marine Engineering (32.05%), TonyMoly (28.57%), Korea District Heating Corporation (19.64%), HiteJinro (19.44%), Green Cross Corporation (17.47%), Nongshim (14.08%), and SK Chemicals (13.96%).

Securities firms expect LG Innotek's Q1 operating profit to exceed 100 billion KRW, significantly surpassing the consensus. Juminwoo, a researcher at Meritz Securities, stated, "Although the recent consensus for LG Innotek's Q1 operating profit has risen to around 100 billion KRW, it is expected to exceed this by more than 35%." He analyzed, "This strong performance is due to the impact of a strong dollar, increased per-unit sales of the Apple iPad Pro 4th generation, and the initial production effect of the iPhone SE2."

Hyundai Wia's earnings outlook was revised upward as the situation in China improved. Jeong Yongjin, a researcher at Shinhan Financial Investment, explained, "Previously, considering the sharp drop in Chinese demand in Q1, the automotive division was expected to turn to a loss. However, as the business conditions for Hyundai-Kia Motors in China improved faster than expected in March, the earnings estimates were revised upward." He added, "The operating rate of finished vehicles in China, which was close to 0% in February, is estimated to have recovered to the 50% range in March. It is expected to improve to the 70% range from April, and the pace of recovery will depend on the strength of the Chinese government's consumption stimulus measures." Shinhan Financial Investment raised Hyundai Wia's target stock price by 9.1% to 36,000 KRW.

Daewoo Shipbuilding & Marine Engineering, SK Chemicals, Nongshim, TonyMoly, and Green Cross also saw their Q2 operating profit consensus revised upward. Daewoo Shipbuilding & Marine Engineering's Q2 operating profit consensus was revised up by 466.67%, from 6 billion KRW to 34 billion KRW, marking the largest increase in Q2 earnings forecasts over the past month. SK Chemicals was revised up by 52.35%, Nongshim by 25.54%, TonyMoly by 20%, and Green Cross by 14.72%. Although Daewoo Shipbuilding & Marine Engineering's consensus was revised upward, the overall earnings outlook for this year remains bleak. Lee Dongheon, a researcher at Daishin Securities, diagnosed, "Due to management focused on internal stability, the sales decline phase will continue through this year, and profits will decrease due to the reduction in scale. However, this year is expected to be the bottom, and after this year passes, the company will enter an overall improvement phase with decisions on acquisition, resolution of the time lag between orders and sales, and scale expansion."

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