S. Korean listed firms’ earnings outlook rosy in 2020: data

Despite their disappointing earnings results so far, major South Korean listed firms are likely to see a robust performance next year in line with the recovery in the global chip industry, data compiled by a local market tracker showed Monday.

According to FnGuide, the combined operating profit of 279 publically traded companies is projected to climb 26 percent next year on a consolidated basis to 165.8 trillion won ($142 billion) from 131.6 trillion won this year.

Their net profit and sales are projected to gain 29.2 percent and 5.8 percent, respectively, to 122.2 trillion won and 2030.8 trillion won in the same period. 

The 2020 earnings forecasts for 279 firms being traded on the benchmark Kospi and secondary Kosdaq were provided by the major brokerages here.

Of the total, 255 firms are likely to see an improvement or maintain this year’s level of operating profit, while 24 companies are projected to see a decline, the data showed.

By firms, Samsung Electronics’ operating profit is expected to jump 35.7 percent on-year to 37.3 trillion won. Its net profit is projected to gain 33.1 percent to 29.3 trillion won.

Chipmaker SK hynix’s operating profit and net profit is projected to jump 134.3 percent and 112.9 percent to 6.7 trillion won and 5.1 trillion won, respectively. An expected recovery of both domestic and global chip market is forecast to help it post healthier earnings next year.

Other major listed firms such as the operating profit of No. 1 automaker Hyundai Motor and internet giant Naver is projected to gain 32.9 percent and 42.8 percent on-year, respectively, at 4.7 trillion won and 1.7 trillion won.

“The combined net profit of Kospi-listed firms is likely to surpass 100 trillion won next year, signaling a recovery in their earnings,” Lee Jin-woo, an analyst at Meritz Securities said.

Yuanta Securities analyst Kim Kwang-hyun projected a rebound in profit in the local semiconductor industry, which has been weighed down by global issues including the US-China trade war and Japan’s export curbs on key materials needed for production of memory chips and displays.

“The stock market is projected to see a big change in 2020 as the firms that are facing losses this year due to a slowdown in the semiconductor market are likely to recover,” Kim said.

“But the recovery in the oil refining, chemicals, steel and few other sectors could be due to a base effect,” he warned, mentioning possible distortion in inflation figures when compared to the corresponding period this year.

By Jung Min-kyung (mkjung@heraldcorp.com)