As Expected, Stamina... Stock Price Soars on Q2 Earnings Surge

Q2 Operating Profit Improvement
Only 26 out of 179 Companies
Seegene Shows Largest Increase
Food Sector Upwardly Revised, Nongshim and Others' Stock Prices Rise
Internet and Game Stocks Like Naver and NC Remain in Focus for Second Half

[Asia Economy Reporter Oh Ju-yeon] As the domestic stock market shows a sharp rebound with the majority of stocks rising together and recently entering a consolidation phase, the market is focusing on the fundamental strength of companies. With the stock prices entering a short-term overheated phase and price burdens increasing, investors seem to be seeking justification for stock price increases in the second-quarter earnings, which can be immediately verified, rather than uncertain futures. Stocks expected to show improved second-quarter earnings have been steadily rising even during the recent correction.

According to financial information provider FnGuide on the 23rd, among 179 stocks, only 26 (14.5%) are expected to have operating profit estimates for the second quarter of this year that increase compared to the same period last year and have been revised upward even after the COVID-19 pandemic. These stocks are mainly concentrated in software, food products, telecommunications, semiconductors, and biotechnology sectors.

The company with the largest year-on-year improvement in operating profit is Seegene, a KOSDAQ-listed company. Seegene's operating profit for the second quarter of this year is expected to be 174.1 billion KRW, a 3649% increase compared to the same period last year. Seegene has greatly benefited from strong sales of COVID-19 diagnostic equipment. On this day, KTB Investment & Securities raised Seegene's target price from 130,000 KRW to 140,000 KRW, anticipating a longer-than-expected benefit from COVID-19.

Following Seegene, Celltrion Healthcare showed the next highest growth rate in operating profit. Celltrion Healthcare's operating profit for the second quarter of this year is expected to be 66.7 billion KRW, a 621% increase compared to the same period last year. This figure is even higher than the estimate of 43.6 billion KRW made in early March before the COVID-19 outbreak.

Researcher Lee Dal-mi from SK Securities said, "The blood cancer treatment drug Truxima and the breast cancer treatment drug Herzuma, which are in the early stages of launch in the U.S., are steadily increasing their market share," adding, "The profit margin improvement from these two products is expected to continue in the second half of the year." Thanks to this, Celltrion Healthcare's stock price is also soaring. On this day, Celltrion Healthcare's stock price rose 4.37% from the previous trading day to 117,000 KRW, hitting a 52-week high.

Food companies such as HiteJinro, Nongshim, and CJ CheilJedang also showed significant improvements in operating profit compared to the second quarter of last year, and their earnings estimates have been steadily revised upward even after COVID-19. HiteJinro's operating profit for the second quarter is expected to be 36.8 billion KRW, a 247% increase from 10.6 billion KRW in the same period last year, while Nongshim is expected to increase by 264% to 29.8 billion KRW. CJ CheilJedang is also expected to see a 41% increase in operating profit year-on-year due to increased demand for home-cooked meals. Supported by these upward revisions in earnings estimates, their stock prices are also trending upward. Over the past week since the 15th, Nongshim's stock price rose 9.5%, HiteJinro's 10.1%, and CJ CheilJedang's 5.8%.

Additionally, companies such as TES, SK Hynix, Kiwoom Securities, and NCSoft have seen increases in their second-quarter operating profit estimates compared to both the same period last year and three months ago, resulting in stock price gains. Over the past week, TES rose 16.2%, Kiwoom Securities increased 13.1%, and NCSoft rose 16.7%. During intraday trading on this day, NCSoft's stock price rose 7.77% from the previous trading day to 957,000 KRW, setting a new 52-week high.

Researcher Lee Min-ah from Daishin Securities said, "Internet and game software-related stocks such as NAVER, Kakao, and NCSoft will continue to attract attention in the second half of the year," adding, "In the case of NCSoft, overseas release schedules are expected to be announced, which will further strengthen the stock price momentum."

SK Securities emphasized that it is now time to focus on fundamentals and that companies with solid second-quarter earnings growth should be watched. Researcher Lee Jae-yoon from SK Securities explained, "Typically, in the final phase of a rotation market, preferred stocks surge first due to their undervaluation compared to common stocks, which have higher valuation burdens," adding, "In this context, stocks with good fundamentals and undervaluation will also be positive."

Researcher Lee Jae-yoon added, "In the current situation of high price burdens, concerns about a resurgence of COVID-19 increase volatility, so it is necessary to focus on solid second-quarter earnings," and added, "Sectors where second-quarter earnings estimates have significantly increased or declined less even after COVID-19 include essential consumer goods, telecommunications, and IT software."

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