KOSPI's Sharp Rally Driven by Earnings: 6 Out of 10 Listed Firms Beat Expectations

Earnings Surprises in Semiconductors and Chemicals
Stock Gains Driven by Profit Improvements Beyond Samsung Electronics and SK hynix

The recent rise of the KOSPI above the 7,000 mark has been attributed to a series of “earnings surprises” from companies. As the first-quarter earnings season wraps up this year, six out of every ten listed companies that have reported results so far have outperformed market expectations. However, with heightened geopolitical risks and a surge in profit-taking, the KOSPI index appears to be taking a breather.

On the 8th, as doubts arose over the conclusion of peace negotiations for the Middle East war and the three major U.S. indices simultaneously fell, the domestic stock market also started lower. An employee at the dealing room of Hana Bank headquarters in Jung-gu, Seoul, was monitoring the stock market and exchange rates. On that day, the KOSPI opened at 7,353.94, down 1.82% compared to the previous trading day. Photo by Jo Yongjun

On May 8, the KOSPI opened at 7,353.94, down 1.82% from the previous trading day, and as of 9:50 a.m., it was trading at 7,390.15, down 1.33%. At the same time, the KOSDAQ was trading at 1,206.00, up 0.57%. The won-dollar exchange rate opened at 1,458.5 won, up 4.5 won from the previous day, and was trading at 1,463.9 won.

Overnight, the New York stock markets closed lower due to increased uncertainty surrounding ceasefire negotiations between the United States and Iran. On May 7 (local time), the Dow Jones Industrial Average ended at 49,596.97, down 313.62 points (-0.63%) from the previous session. The Standard & Poor’s (S&P) 500 Index closed at 7,337.11, down 28.01 points (-0.38%), while the tech-heavy Nasdaq Composite finished at 25,806.20, down 32.75 points (-0.13%). Notably, semiconductor stocks saw pronounced declines: AMD fell 3.10%, Intel dropped 3.00%, and Micron was down 2.97%. UK-based semiconductor design company Arm plunged 10.1% on mounting doubts about its artificial intelligence (AI) chip production capabilities.

According to financial information provider FnGuide, as of May 6, out of 119 companies for which at least three brokerage houses provided operating profit estimates, 73 recorded operating profits above consensus (the market average forecast). By sector, Hotel Shilla and others in retail (+705.0%), POSCO Future M in chemicals (+289.7%), Hanwha Solutions in energy facilities and services (+184.4%), Ecopro BM in electronic equipment and devices (+108.3%), and Krafton in game software (+36.1%) all exceeded market expectations. On the other hand, companies such as Samsung SDS in IT services (-41.1%), Yuhan in pharmaceuticals (-18.8%), Hanwha Systems in commercial services (-17.9%), Samsung C&T in conglomerates (-12.9%), and KCC in construction materials (-9.6%) fell short of consensus.

The company that beat expectations by the largest margin in first-quarter operating profit this year was Hanwha Solutions, which posted an operating profit of 92.6 billion won, 706% higher than the consensus estimate of 11.5 billion won. Hanwha Solutions recorded a profit in all business segments—including renewable energy, chemicals, and advanced materials—thanks to the normalization of its local plant’s operations after concerns over U.S. customs clearance were resolved, as well as structural profit improvements due to changes in U.S. policy and market environment.

Hotel Shilla posted an operating profit of 20.4 billion won, exceeding the consensus estimate (2.5 billion won) by 705.0%. For its duty-free division, the company focused on solidifying a stable business foundation through profitability-centered management, while the hotel and leisure division benefited from the opening of new hotels and an increase in foreign tourists.

POSCO Future M’s operating profit was 17.7 billion won, 171.8% above the consensus estimate of 6.5 billion won. Its battery materials business saw increased sales of high-value-added products such as NCA/N87 cathodes, while its basic materials business posted solid results due to increased plant construction and more efficient lime facilities. The next highest outperformance came from HD Hyundai Energy Solutions (+127.3%), Ecopro BM (+113.6%), Daewoo Engineering & Construction (+110.8%), LG Household & Health Care (+110.6%), L&F (+93.3%), Simmtech (+68.4%), and Taihan Cable (+54.7%).

Samsung Electronics, which is leading the KOSPI rally, recorded an operating profit of 5.72328 trillion won, exceeding consensus by 42.4%. SK hynix posted an operating profit of 3.76103 trillion won, 3.3% above the consensus. However, securities analysts estimate that if performance-based bonus provisions are reflected, the actual operating profit would reach 4.2 trillion won—15.4% above consensus.

Both companies are seen as entering a “super cycle” (boom period) as demand for general-purpose DRAM and high-bandwidth memory (HBM) has increased due to the spread of artificial intelligence (AI), alongside rising semiconductor prices.

There were also companies that reported results significantly below market expectations due to the overall sluggish industry environment. Daehan Steel recorded only 100 million won in operating profit, which is 93.8% below the consensus estimate of 1 billion won. OCI Holdings posted an operating profit of 10.8 billion won, 75.3% below the consensus of 43.9 billion won. Hyundai Steel’s operating profit was 15.7 billion won, 72% below the consensus of 56 billion won. This was followed by S-1 (-64.9%), Samsung SDS (-61.2%), Yuhan (-60.2%), Haesung DS (-51.1%), Hyundai Autoever (-47.8%), Hanwha Systems (-41.1%), and GS Engineering & Construction (-33.8%).

Ji-Young Han, a researcher at Kiwoom Securities, stated, “Noise surrounding the ceasefire negotiations and the weakness in the U.S. Philadelphia Semiconductor Index are increasing profit-taking pressure, particularly among domestic AI value chain stocks, leading to a period of consolidation. During this process, we are likely to see rotational inflow into other neglected sectors such as defense, which saw sharp declines the previous day.” She added, “The rapid surge in stock prices over a short period has created incentives for market participants to realize profits. While expectations are rising for an end to the Iran war, it is worth noting that the consensus for this year’s KOSPI operating profit continues to be revised upward, led by the semiconductor sector.”

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