Unsmiling Targets in the 'Buljang' Market Decline

Cosmetics-Related Stocks and Others Fall Short of Estimated Q4 Earnings Expectations Last Year

On the 11th, when the KOSPI index surpassed the 3,200 mark intraday for the first time in history, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Geum Bo-ryeong] As the KOSPI surpassed the 3200 mark during the session, so-called 'bull market' companies that have been left out are wearing a gloomy face as their target stock prices are being downgraded.

According to financial information firm FnGuide on the 12th, 16 stocks have had their target prices lowered compared to previous levels over 7 trading days this year. Their estimated earnings for Q4 last year mostly failed to meet market expectations.

Notable sectors include cosmetics-related stocks. KTB Investment & Securities estimated the Q4 operating profits of Cosmax and Hankook Kolmar at 16.6 billion KRW and 27.5 billion KRW respectively, down 2% and 1% year-on-year. Cosmax showed low visibility in overseas subsidiary performance, with the newly operated hand sanitizer facility in the US making it difficult to estimate the deficit scale. Hankook Kolmar expected domestic cosmetics orders to improve in the second half, but recovery was delayed. Accordingly, target prices were lowered from 140,000 KRW to 130,000 KRW for Cosmax and from 65,000 KRW to 62,000 KRW for Hankook Kolmar.

The situation is similar for Hanse Industrial and Hwasung Enterprise, which produce clothing. Both companies have a high proportion of overseas exports, and the sharp drop in the KRW-USD exchange rate in Q4 last year acted as a variable affecting their performance. Daishin Securities lowered the target prices of Hanse Industrial and Hwasung Enterprise from 25,000 KRW and 20,000 KRW to 21,000 KRW and 18,000 KRW respectively.

Hite Jinro was affected by social distancing measures due to COVID-19. The impact on the business performance was reflected mainly in the on-trade market, with operating profits expected to fall short of market expectations. Lee Kyung-shin, a researcher at Hi Investment & Securities, explained, "The contraction of the on-trade liquor market due to COVID-19 and the related negative impact on business performance are inevitable." The target price was lowered from 53,000 KRW to 45,000 KRW.

Given this situation, stock prices are also on a downward trend. Cosmax's closing price fell 4.97% from 98,500 KRW on the 6th to 93,600 KRW the previous day. During the same period, Hankook Kolmar dropped 1.95% from 51,300 KRW to 50,300 KRW, Hanse Industrial fell 6.48% from 16,200 KRW to 15,150 KRW, and Hwasung Enterprise declined 5.90% from 13,550 KRW to 12,750 KRW. Meanwhile, the KOSPI rose 6.07% from 2,968.21 to 3,148.45 during this period.

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