Samsung Electronics is the world's leading company in operating profit margins. Despite impressive earnings from domestic semiconductor firms like Samsung Electronics and SK Hynix, analysts attribute the sluggish stock performance to the onset of an 'era of profit slowdown.'
Heo Jae-hwan, a researcher at Eugene Investment & Securities, stated in a report on October 12 that the earnings per share (EPS) growth rate for domestic companies this year is 237%, significantly outpacing Taiwan's 68% and Japan's 25%. Samsung Electronics' operating profit for the third quarter reached 107.4 trillion won, a staggering 783% increase compared to the same period last year.
However, the sentiment in the domestic stock market contrasts sharply with these results. While Taiwan's TAIEX index recently hit an all-time high and Japan's Nikkei index approached its June peak, South Korea's KOSPI has shown a noticeable slowdown following its rise in the first half of the year.
The reason for this decoupling is attributed to the 'slowing profit growth rate.' The stock market tends to reflect future expectations, so when the pace of profit improvement slows, the momentum for stock price increases inevitably weakens.
Samsung Electronics' operating profit growth rate of 783% in the third quarter has dropped to less than half of the 1,814% seen in the second quarter. Even if the operating profit for the fourth quarter increases further, the year-on-year growth rate is expected to decline to around 480%. While profits are increasing, the company is effectively easing off the accelerator.
Comparing long-term profit momentum by country, the slowdown in the domestic stock market is steep. While corporate profit growth rates in Japan, Taiwan, and the United States are expected to show gradual declines in 2027 and 2028, the estimated EPS growth rate for the KOSPI is projected to plummet from 33% next year to just 6.3% by 2028.
Heo predicts that the market's focus, which has been concentrated on semiconductors, will gradually spread to other sectors.
The KOSDAQ market has shown relatively strong performance compared to the KOSPI over the past month, which aligns with this trend. The operating profit growth rate for the KOSDAQ is estimated to decrease from 76% this year to around 40% next year, a more moderate decline compared to the KOSPI's drop from 227% to 35%.
Expectations for performance in other industries, excluding semiconductors, are also on the rise. Sectors such as energy, shipbuilding, transportation, IT electronics, and machinery are seeing upward revisions in their second-half performance estimates.
Notably, sectors expected to see significant increases in operating profit next year compared to this year include IT electronics, IT hardware, and chemicals. Heo noted, 'The IT electronics sector, which includes secondary battery-related industries, is likely to emerge as a new focus in terms of performance expectations for the remainder of this year and next year.'
* This article has been translated by AI.
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