Despite COVID-19, Second Half Performance Last Year Better Than Previous Year

[Asia Economy Reporter Junho Hwang] The operating profits of major listed companies that announced their preliminary results for the fourth quarter of last year showed improvement compared to the previous year despite COVID-19. Yuanta Securities analyzed the results of 93 out of 200 Universe stocks (46.5%) that announced their fourth-quarter earnings as of the 5th. The companies that announced their results account for less than half of the total. However, since major large-cap stocks have reported their results, the announcement rate in terms of amount is equivalent to 72.2%.

Operating Performance Exceeds Previous Year Despite COVID-19

Among the 93 stocks, 35 exceeded the forecast. The proportion of companies that recorded an earnings surprise, with results better than market expectations, reached 37.6%. The average fourth-quarter earnings surprise rate over the past five years (2015-2019) is 29.3%. The forecast achievement rate is calculated at 80.9%.

The preliminary operating profit of the companies that announced their results is 25.3 trillion KRW, which is 97.7% of the early-year forecast of 25.9 trillion KRW. The early-year forecast for the 107 stocks that have not yet announced results is 10 trillion KRW. Among these, 22 stocks have a market capitalization of over 5 trillion KRW, including Celltrion, Kakao, Celltrion Healthcare, SK, and NCSoft. There are 18 stocks with a fourth-quarter forecast exceeding 200 billion KRW.

Assuming that the 107 stocks that have not yet announced results achieve 80% of their year-end forecasts, the overall forecast achievement rate for all companies is expected to be about 92.8%. Even if only 70% is achieved, the overall forecast achievement rate can exceed 90%.

Assuming a conservative forecast achievement rate of 70%, the fourth quarter will record a 42.6% improvement compared to the previous year. On an annual basis, about a 7% increase in performance is expected. Despite the sluggish first half due to COVID-19, this represents a better year in terms of profits compared to 2019.

This Year Expected to be the Largest Ever

Yuanta Securities forecasted the operating profit scale of companies this year at 185 trillion KRW, a 43% increase from last year. This is even higher than the record high in 2018.

The semiconductor sector’s profit is expected to decrease by about 22 trillion KRW compared to 2018. However, the automobile (+8.0 trillion KRW), pharmaceutical/bio (+2.7 trillion KRW), shipping (+2.4 trillion KRW), securities (+2.4 trillion KRW), internet/gaming (+2.3 trillion KRW), chemical (+2.3 trillion KRW), and banking (+2.2 trillion KRW) sectors are expected to record higher profits compared to 2018. Additionally, the construction, food and beverage, electronics/components, display, and media/entertainment sectors are forecasted to reach record highs, making it necessary to pay attention to whether these targets are achieved.

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