Sweetness in drought... Earnings stocks supporting the bear market spotlight

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[Asia Economy Reporter Junho Hwang] In the second quarter earnings season, which arrived amid a gloomy economic outlook, stocks posting strong results are contributing to the short-term bear market rally.

Min-gyu Kim, a researcher at KB Financial Investment, analyzed the stocks that showed good performance in the second quarter this year, stating, "Inflation and cost pass-through significantly contributed to the earnings improvement," and "inflation boosted nominal sales, and cost pass-through enabled margin protection."

However, he noted, "Since cost increases have a delayed and growing impact, profit margin forecasts should be lowered, and in fact, the KOSPI operating profit margin forecast, which had been maintained in the mid-8% range this year, has fallen below 8% during the earnings season." Nevertheless, he added, "Given that the stock market has been subdued for a long time due to demand slowdown concerns, even limited surprises can sufficiently serve as a catalyst for a short-term rebound."

Based on this outlook, KB Securities selected stocks that showed good results in the first quarter earnings season and whose forecasts are being revised upward this quarter. These are stocks expected to maintain their profit margins in the second quarter of this year while also increasing profits next year.

In the IT sector, LG Innotek, Samsung SDI, and L&F were identified as fitting this category. In the food and beverage sector, stocks such as Orion, Lotte Chilsung, and SPC Samlip were highlighted, while in the media sector, attention was drawn to stocks like Studio Dragon and Cheil Worldwide.

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