"Far from the Peak"... Stocks Expected to Rise Further According to Securities Analysts

Is it a peak, or will it rise further?

As the KOSPI index settles around the 2600 level, investors' attention is focused on stocks with additional upside potential. Since many companies currently have stock prices lower than the target prices set by securities firms at the beginning of the year, there is a prospect that stock prices may continue to rise depending on earnings and whether earnings consensus (average) is revised upward.

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On the 14th, an analysis of stocks with upward revisions in target price consensus over the past month through financial information provider FnGuide showed that in the KOSPI market, sectors such as maritime transportation, IT services, electric power, hotels and leisure, pharmaceuticals, and commercial banks were evenly represented. In the KOSDAQ market, target prices for media, semiconductors and related equipment, electronic equipment and devices, and general software rose sharply.

Among both the KOSPI and KOSDAQ markets, the stock identified as having the greatest potential price increase was HMM. Over the past month, the target price consensus rose from 16,250 KRW to 21,750 KRW, an increase of 33.85%. The reason for the target price hike is "earnings." Securities firms significantly raised HMM's operating profit forecast for this year from 210 billion KRW a month ago to over 1 trillion KRW, reflecting high expectations for earnings. FnGuide also projected HMM's operating profit this year at 1.0547 trillion KRW due to container freight rate increases amid the Middle East conflict. Although the stock price has fallen compared to the beginning of the year, it rose 14% over two months from 15,680 KRW as of December 13 last year to 17,820 KRW. However, volatility has increased recently due to the failed sale.

Securities firms also raised target prices for Lotte Information & Communication, Hancom, and Kogyeong by 12% to 30%. The target price hikes are based on forecasts of increased operating profits due to the AI boom and semiconductor industry improvement.

Oh Kang-ho, a researcher at Shinhan Investment Corp., raised Lotte Information & Communication's target price to 55,000 KRW, stating, "Sales by business segment were 45.7 billion KRW for system management (SM) and 300.7 billion KRW for system integration (SI), with all business units growing simultaneously," and added, "Expecting subsidiary earnings improvement and securing IT service capacity base will drive growth this year."

Lotte Information & Communication closed at 38,600 KRW the previous day. Considering the average target price of 53,400 KRW set by securities firms, there is still potential for stock price appreciation.

Kumho Tire and HD Hyundai Electric also joined the ranks of target price upgrades due to expected earnings growth this year. Hana Tour's target price was raised based on expectations of record-high earnings this year, while Korea District Heating Corporation and Boryeong's target prices were adjusted upward reflecting earnings improvement prospects. Additionally, in the KOSPI market, target prices for companies engaged in commercial banking and securities businesses were raised consecutively. This is interpreted as reflecting expectations that buying demand will pour into the financial sector, considered a policy beneficiary, following the government's announcement to introduce a corporate value-up program.

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In the KOSDAQ market, CJ ENM was identified as a stock likely to show strength. This is due to expectations of turning a profit for the year and a significant improvement in earnings from the second half of this year. CJ ENM announced that its operating profit for the fourth quarter of last year was preliminarily estimated at 58.7 billion KRW, a 787.7% increase compared to the same period last year. This figure greatly exceeded market estimates (operating profit of 30.7 billion KRW). The stock price is also on an upward trajectory. CJ ENM's stock price had fallen to the 50,000 KRW range until October last year but recently surged to the low 80,000 KRW range.

The target price for semiconductor equipment maker HPSP also rose by nearly 15% on average compared to a month ago. Securities firms explained that the reason for the target price increase is the expected rise in equipment demand and earnings improvement for HPSP due to the semiconductor industry recovery.

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