Medical Equipment Smiles Amid COVID, Travel Industry Cries

Q2 Operating Profit Estimates for 179 Listed Companies at 22.7 Trillion Won, Down 30.44%
Casino and Airline Industries Also 'Negative' Due to Social Distancing Impact

[Asia Economy Reporter Oh Ju-yeon] The performance disparities among domestic listed companies in the second quarter due to the novel coronavirus infection (COVID-19) are becoming more pronounced. The hotel leisure and airline industries were directly hit by the frozen travel sentiment caused by concerns over the spread of the epidemic, resulting in a sharp decline compared to the estimates made in early March, just before the impact of COVID-19 appeared. Medical equipment, pharmaceuticals, and bio sectors benefited from increased demand for diagnostic kits and personal hygiene products. Manufacturing industries such as automobiles suffered significant damage due to decreased exports, but semiconductors and related equipment are expected to improve performance thanks to steady demand centered on servers and PCs as remote work and online education increased due to COVID-19.

According to FnGuide, a financial information company, as of June 1, the operating profit estimates for 179 listed companies in the second quarter of this year, predicted by three or more domestic securities firms, totaled 22.5731 trillion won. This is a 30.44% decrease from the estimate of 32.4529 trillion won as of March 1, before the spread of COVID-19.

The securities industry initially expected that domestic listed companies' performance would hit bottom in the first quarter and enter a full recovery phase from the second quarter. Last year's second-quarter performance was 28 trillion won, and if there had been no unexpected variable like COVID-19 this year, a 15.90% increase compared to the previous year could have been expected according to the forecast three months ago. However, due to the impact of COVID-19, the operating profit of domestic listed companies in the second quarter of this year is expected to shrink by 19.40% rather than grow compared to last year.

The second-quarter performance is analyzed to show clear disparities by industry. In the travel sector, including companies like Modetour and Hanatour, operating results for the second quarter are expected to decrease significantly compared to last year. Modetour, which recorded a 200 million won loss in the second quarter of last year, is expected to see its loss expand to 11.5 billion won this quarter, and Hanatour is expected to turn from a 3.6 billion won profit to a 27.5 billion won loss. Three months ago, their loss margins were forecasted to be only 3.9 billion won and around 300 million won respectively, but the impact of COVID-19 continuing into the second quarter has lowered performance expectations further.

Casino industries such as Paradise and Grand Korea Leisure (GKL) were also expected to see their second-quarter performance increase up to four times compared to the previous year, with estimates of 21.5 billion won and 32.4 billion won respectively, but due to business closures following 'social distancing' measures, estimates have turned negative within three months. The airline industry faces a similar situation. Korean Air's second-quarter operating profit estimate turned from a 41.3 billion won profit three months ago to a 199.2 billion won loss, and Jeju Air and T'way Air are expected to post losses of 84.3 billion won and 51.1 billion won respectively, with losses widening compared to estimates three months ago.

Additionally, due to the plunge in crude oil prices and decreased demand caused by COVID-19, refiners are inevitably facing performance declines. Refiners that were expected to earn operating profits in the range of 200 billion to 300 billion won three months ago are now projected to post losses ranging from 40 billion to 400 billion won. Hyundai Motor and Kia Motors have seen their operating profit estimates decrease by more than 70% compared to three months ago due to export declines.

Industries with improved second-quarter performance forecasts include medical equipment, food products, telecommunications, and gaming. These sectors were already expected to improve compared to last year three months ago, but COVID-19 has further boosted their performance. Along with these, semiconductors and related equipment are also expected to see significant performance improvements due to increased demand from remote work and other COVID-19 related changes.

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