KOSPI's Full-Year Operating Profit Expected to Approach 230 Trillion Won

75% Increase Compared to Same Period Last Year
Highest Proportion in Electrical and Electronics Sector
LG Chem Shows Largest Increase of 205%

[Asia Economy Reporter Song Hwajeong] This year, KOSPI operating profit is expected to surpass the 200 trillion won mark for the first time in history. The market forecasts it to reach as high as 230 trillion won.

According to financial information firm FnGuide on the 15th, this year's KOSPI operating profit consensus is 228.1372 trillion won, expected to increase by 75.37% compared to the previous year.

The combined operating profit of the top 10 companies by market capitalization is projected to be 87.2943 trillion won, accounting for more than 38% of the total operating profit. The leading stock, Samsung Electronics, is expected to record 52.8128 trillion won, and SK Hynix 12.346 trillion won, together making up 74% of this amount. Operating profits for Samsung Electronics and SK Hynix are anticipated to increase by 46.73% and 146.73%, respectively, compared to the same period last year. Among the top market cap stocks, LG Chem is expected to show the largest year-on-year performance increase. LG Chem's operating profit consensus for this year is 5.4969 trillion won, a 205.69% increase from the previous year. Hyundai Motor (7.1006 trillion won) and Kia (5.3961 trillion won) are also expected to contribute to overall growth with increases of 196.52% and 161.13%, respectively.

By industry, the electrical and electronics sector, which includes Samsung Electronics and SK Hynix, holds the largest share of operating profit. The operating profit consensus for the electrical and electronics sector this year is 77.2569 trillion won, a 63.06% increase from the previous year. Following this are the chemical sector, which is expected to increase by 458.7% to 28.9906 trillion won, and the transportation equipment sector, which is projected to grow by 95.87% to 12.5634 trillion won. The sector with the largest growth rate is transportation and warehousing. The operating profit consensus for this sector is 9.5257 trillion won, expected to increase by 574.31% year-on-year. Airlines, which were hit hard by COVID-19 last year, are expected to show significant recovery this year. Korean Air's operating profit consensus is 1.1578 trillion won, a sharp increase of 963.02% compared to the previous year. Additionally, the chemical (458.7%) and steel & metals (272.49%) sectors are expected to show triple-digit growth compared to last year. The chemical sector's performance is expected to improve significantly due to the growth of secondary batteries and a turnaround to profitability in the battery segment.

The only sectors expected to see a decline in performance compared to the previous year are the electric and gas utilities and insurance sectors. The electric and gas utilities sector is expected to record a loss of 1.9976 trillion won this year. Korea Electric Power Corporation (KEPCO) is anticipated to post an operating loss of 3.611 trillion won, dragging down the overall sector performance. KEPCO is the only company among the top 30 by market capitalization expected to record a loss this year. The insurance sector's operating profit consensus is 1.1004 trillion won, a 38.52% decrease from the previous year.

This year's performance increase is attributed to the base effect from last year's COVID-19 impact and a rapid recovery. According to the Ministry of Trade, Industry and Energy, as of the 13th, cumulative exports this year surpassed 604.9 billion dollars, exceeding the record annual high set in 2018. Supported by exports, KOSPI operating profit is expected to reach its highest level in three years since 2018.

Although the growth rate is expected to slow, the growth trend is projected to continue next year. The KOSPI operating profit consensus for next year is 245.7891 trillion won, expected to increase by 7.74%. However, recent consensus estimates have been continuously revised downward, so optimism is cautious. The operating profit consensus for next year is 1.2% lower than a month ago. Jiwoo Hwang, a researcher at Shin Young Securities, said, "Monthly KOSPI profit forecasts have been continuously revised downward, but the downward revision for the semiconductor sector's profits has significantly slowed. Recently, as IT sector stocks worldwide have shown strength, there are signs of potential economic changes in the domestic semiconductor sector as well."