The optimism in the securities market regarding the KOSPI's recovery to the 7,700 level is being tested. This comes as the combined net profit forecast for Samsung Electronics and SK Hynix has dropped by over 15 trillion won in just a month. Analysts suggest that market attention is shifting from immediate performance to the sustainability of future profit growth.
According to financial information provider FnGuide, as of October 8, the consensus for Samsung Electronics' consolidated net profit for this year is 302.96 trillion won, a decrease of 17.61 trillion won (5.49%) from the previous month's forecast of 320.56 trillion won. In contrast, SK Hynix's forecast increased slightly from 254.60 trillion won to 256.32 trillion won, an increase of 2.26 trillion won (0.89%). The combined net profit forecast for the two companies has fallen from 574.63 trillion won to 559.28 trillion won, a reduction of 15.35 trillion won (2.67%).
The decline in Samsung Electronics' profit outlook has outpaced the increase in SK Hynix's, leading to a lowered profit expectation for both companies. Operating profit forecasts have also been adjusted downward. Samsung Electronics' operating profit consensus has decreased by 18.80 trillion won (4.83%) to 370.38 trillion won, while SK Hynix's forecast dropped from 265.11 trillion won to 263.34 trillion won, a decline of 1.77 trillion won (0.67%).
This trend contrasts with the recent positive performance in the semiconductor sector. On October 8, Samsung Electronics announced a record provisional operating profit of 107.4 trillion won for the third quarter. However, the stock price remained weak following the earnings announcement. The focus has shifted from the magnitude of profits to the sustainability of future growth.
The changes in profit forecasts are also linked to the ongoing debate about the KOSPI's undervaluation. Daishin Securities previously analyzed that the KOSPI's 12-month forward earnings per share (EPS) stands at 1,293.5 points, with a forward price-to-earnings ratio (PER) of 5.26 times. Applying a PER of 6 times to the EPS would yield an estimated KOSPI of about 7,761 points. However, this figure assumes that corporate profit forecasts remain stable and that market valuations recover.
If corporate profit forecasts decline, the PER will rise even if stock prices remain stagnant. It is essential to distinguish whether a low PER indicates potential for future stock price increases or reflects concerns about long-term profit declines. However, there are limitations in directly comparing the KOSPI's overall 12-month forward EPS with individual companies' annual net profit consensus due to differences in aggregation criteria.
Some analysts believe that the recent stock price decline reflects an excessive reaction to concerns about deteriorating semiconductor conditions. Lee Kyung-min, a researcher at Daishin Securities, noted in a weekly investment strategy report that the KOSPI's 12-month forward PER has dropped to 5.1 times. He explained that the market is discounting the sustainability of profits beyond this year and next.
Lee assessed that the potential for the semiconductor sector to have passed its peak and concerns about future deterioration have already been largely factored into stock prices. If the pressures from rising interest rates and oil prices ease, the previously obscured drivers of performance improvement may come back into focus.
The key question moving forward is whether the semiconductor boom can lead to long-term profit growth. The earnings announcements from Dutch semiconductor equipment company ASML on October 14 and Taiwan's TSMC on October 15 are expected to be significant indicators of global semiconductor demand and investment trends. If these companies' results and future outlooks align with market expectations, it could positively influence investor sentiment towards domestic semiconductor giants and aid in the recovery of KOSPI valuations.
* This article has been translated by AI.
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