Strengthening Corporate Earnings 2nd Quarter Bottom Theory... 3rd Quarter Listed Companies' Operating Profit Expected to Increase by 9 Trillion Won

Hyundai Motor·Kia Expected to Break Record Q1 Earnings Again
Samsung Electronics Anticipated to Return to Profit in Q2 and Recover Strongly from Q3
SK Hynix Forecasted to Remain in Deficit Until Q3... Semiconductor, Display, Utility, Shipbuilding, and Chemical Sectors Promising

Domestic listed companies' earnings are expected to have bottomed out by the second quarter and to rebound significantly from the third quarter onward. The key driver is semiconductors. Market experts estimate that Samsung Electronics, which posted a loss of around 4 trillion won in the first quarter, will turn profitable as early as the second quarter due to the semiconductor market recovery and generate profits in the 3 trillion won range again in the third quarter.

On the 14th, FnGuide compiled the second-quarter operating profit estimates for 256 listed companies with forecasts from three or more institutions, totaling 35.1768 trillion won. Compared to their operating profit in the second quarter of last year (62.1112 trillion won), this represents a 43.4% decrease. Although the decline narrowed slightly compared to the first quarter, it appears that the companies have not escaped the slump throughout the first half of the year.

Among them, Hyundai Motor, which recorded the highest operating profit among listed companies in the first quarter with an all-time high performance, is expected to maintain its top position in the second quarter as well. Hyundai Motor's estimated second-quarter sales are 39.934 trillion won, and operating profit is estimated at 3.6089 trillion won. These figures represent increases of 10.9% and 21.1%, respectively, compared to the second quarter of last year. On a quarterly basis, these estimates surpass the record-breaking first quarter (sales of 37.7787 trillion won, operating profit of 3.5927 trillion won), indicating a strong possibility of setting new performance records. Additionally, Kia is also expected to continue its strong performance with second-quarter sales of 25.5224 trillion won and operating profit of 2.9801 trillion won, maintaining a successful streak for the first half of the year combined.

Samsung Electronics, which posted a loss of around 4 trillion won in the first quarter, has an estimated operating profit of 219 billion won for the second quarter this year. Since there is still time before the second quarter closes, it is somewhat early to be certain of a turnaround to profitability. However, the outlook for a significant recovery compared to the first-quarter loss remains valid. Furthermore, it is expected to recover sharply from the third quarter and return to a normal trajectory next year. Dongwon Kim, a researcher at KB Securities, analyzed, "Second-quarter DRAM shipments are estimated to increase by 20% compared to the previous quarter, signaling the start of inventory reduction. Due to the production cut effects, memory semiconductor supply and demand are improving, and prices are expected to turn upward from the fourth quarter." He added, "Mass production of HBM3 memory for artificial intelligence (AI) servers is expected to begin in September." He further noted, "Considering the full-scale entry into the AI server market and the value of the foundry business from the fourth quarter, Samsung Electronics' stock price has ample room for growth."

In the case of SK Hynix, it is expected to take somewhat longer than Samsung Electronics to recover its performance. Following an operating loss of 3.4 trillion won in the first quarter, a deficit of 3.2196 trillion won is also expected in the second quarter. SK Hynix is projected to record a total loss of around 9 trillion won for the year, including an estimated 2.427 trillion won deficit through the third quarter.

Thanks to Samsung Electronics' sharp earnings turnaround, the earnings outlook for domestic listed companies in the third quarter is bright. According to FnGuide, the total operating profit forecast for listed companies in the third quarter is 45.9329 trillion won, which is higher than the third-quarter earnings of last year (44.692 trillion won).

Donggil Noh, a researcher at Shinhan Investment Corp., advised, "Investors considering increasing their stock exposure should take advantage of the volatility phases that may occur from mid-June through the third quarter." He added, "The overall KOSPI profit growth rate is expected to turn around from the second quarter low starting in the third quarter, making the second half of the year the right time to focus on these industries and stocks." He further stated, "Based on earnings forecasts for this year and next, a strategy focusing on IT sectors such as semiconductors and displays, while seeking excess returns in utilities, shipbuilding, and chemicals, will be effective."

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