[Q2 Stock AI]② ‘Now Rising’ Semiconductor vs ‘Still Running’ Secondary Battery

Foreigners Bought 2.2336 Trillion Won of Samsung Electronics in April
Analysis Shows Easing of Concentration in Some Themes Like Secondary Batteries

Despite the earnings shock in the first quarter, foreign investors are sending love calls to ‘Samsung Electronics.’ The secondary battery craze, which started with a buying rally led by individual investors in EcoPro, is heating up POSCO Group stocks and showing signs of shifting to ‘less-risen secondary battery stocks.’ In the securities industry, target prices for semiconductor stocks are being raised, while reports with a ‘sell’ opinion have been issued, citing overheating in secondary battery stocks. Who will be the leading stock in the second quarter? The market is closely watching whether the buying trend will shift from secondary batteries to semiconductors.

According to the Korea Exchange on the 24th, the stock most net-purchased by foreigners from the beginning of this month to the 20th was Samsung Electronics. During this period, foreigners purchased a total of KRW 2.2336 trillion worth of Samsung Electronics shares.

Samsung Electronics Semiconductor (DS) Division Hwaseong Campus. Photo by Samsung Electronics

Samsung Electronics recorded its worst earnings shock in 14 years in the first quarter of this year. However, foreign investors are sending love calls regardless. This is interpreted as due to the spread of the semiconductor bottoming theory and Samsung Electronics’ ‘surprise production cut.’ On the 7th, during the earnings conference call, Samsung Electronics shifted from its previous stance of “no production cuts” to announcing a meaningful reduction in memory production volume.

The securities industry is raising Samsung Electronics’ target price one after another. Hi Investment & Securities raised the target price from KRW 75,000 to KRW 83,400. Kiwoom Securities (KRW 78,000 → KRW 80,000), Daol Investment & Securities (KRW 71,000 → KRW 75,000), and Shin Young Securities (KRW 76,000 → KRW 79,000) also simultaneously raised their target prices. Foreign securities firms are also sending positive signals for Samsung Electronics. HSBC raised Samsung Electronics’ target price from KRW 75,000 to KRW 88,000. Goldman Sachs and Mizuho also raised their target prices from KRW 74,000 to KRW 77,000 and KRW 77,000 to KRW 80,000, respectively.

Seung-yeon Seo, a researcher at Shin Young Securities, explained, “Ahead of the seasonal peak in the second half, Samsung Electronics’ proactive production cut policy as a leading company will act as a catalyst to induce purchasing demand and strengthen the recovery of the industry.” He added, “With the memory industry expected to recover and earnings to improve in the second half, we maintain the view that a strategy to increase weighting is valid.” Min-bok Wi, a researcher at Daishin Securities, also said, “Samsung Electronics has a cost advantage over competitors based on its high market share, so the scale of production cuts will be limited compared to competitors,” and recommended an aggressive buying strategy as it is expected to be the biggest beneficiary when the industry recovers.

Unlike securities firms, individual investors are still continuing their buying rally in secondary battery stocks. The market’s center of gravity has not yet tilted toward either semiconductors or secondary batteries. According to the Korea Exchange, the stock most net-purchased by individual investors from the beginning of this month to the 20th was POSCO Holdings (KRW 2.8871 trillion). Following that was EcoPro (KRW 426.8 billion), EcoPro BM (KRW 118 billion), and L&F (KRW 110.5 billion), all ranking within the top 10 net purchases.

The securities industry views the continuous buying rally of individual investors in secondary battery stocks with concern. The consensus is that the valuation (corporate value relative to earnings) of secondary battery stocks is overestimated. Additionally, news of stock sales by executives of EcoPro and EcoPro BM, the leading secondary battery stocks, has spread the perception of a ‘peak in secondary battery stocks.’ According to the Financial Supervisory Service’s electronic disclosure system on the 17th, the head of EcoPro’s management division sold 1,924 shares of EcoPro on the 13th through the market. Earlier, executives of EcoPro BM also sold some shares of EcoPro BM.

Hyun-soo Kim, a researcher at Hana Securities who issued a ‘sell’ opinion on EcoPro for the first time, pointed out, “While the industry’s growth potential is solid, the current stock price is considerably overvalued.” Regarding POSCO Holdings, which has emerged as the second EcoPro, Kyobo Securities downgraded its investment opinion from ‘buy’ to ‘hold.’ Kwang-je Baek, a researcher at Kyobo Securities, analyzed, “POSCO Holdings’ stock price has risen excessively due to the formation of the secondary battery theme in the market.”

Balancing with Healthcare, Entertainment, and Media Stocks

Some analysts say that the concentration on certain themes such as secondary batteries in the stock market is easing. As the secondary battery concentration decreases, the KOSPI, which has received relatively less attention compared to KOSDAQ, is expected to gain attention.

Da-seok Kang, a researcher at Yuanta Securities, said, “In the first quarter stock market, there was a large performance gap between the secondary battery sector and other sectors, but recently, with the rise of healthcare, entertainment, and media stocks, a balancing phenomenon is occurring.” He added, “The operating profit margin gap between the semiconductor sector and secondary batteries is not widening, so warmth is expected to spread to other sectors, easing the concentration.”

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