Securities Firms Pinpoint 'Aekyung Industrial, Kakao Pay, Hyundai Construction Equipment'

Target Price Upgrades by 3 or More Securities Firms in the Past Month
Sollem, Clio, and SK IE Tech Expected to Underperform

[Asia Economy Reporter Son Sun-hee] Ahead of the New Year's stock market opening, securities firms have identified major stocks expected to see 'price increases,' including Aekyung Industrial, Kakao Pay, and Hyundai Construction Equipment.

On the 5th, based on a request from Asia Economy, FnGuide analyzed the target prices set by securities firms (at least three firms per stock) over the past month for companies listed on the KOSPI and KOSDAQ. Aekyung Industrial was identified as the top promising stock. The target price for Aekyung Industrial, as projected by securities firms, rose 19.61% from 17,000 KRW (as of December 1, 2022) to 20,333 KRW (as of December 31, 2022).

Aekyung Industrial is a company that sells cosmetics and household products. It is considered a beneficiary stock as exports to China are expected to increase following China's reopening of economic activities. Eun-jung Park, a researcher at Hana Securities, set a target price of 22,000 KRW for Aekyung Industrial in a report released early last month. Park stated, "Strong digital sales in Japan, China, the United States, and Southeast Asia are core to Aekyung Industrial," adding, "With continued export growth, we expect Aekyung Industrial's operating profit this year to increase by 36% to 53.3 billion KRW compared to last year."

Kakao Pay and Hyundai Construction Equipment also ranked among stocks with high target price growth rates set by securities firms over the past month. Kakao Pay's stock price, which once soared to the mid-200,000 KRW range after its listing (November 2021), plunged to the 30,000 KRW range (October 2022) due to severe underperformance last year. However, news emerged late last year that Kakao Pay was considering acquiring Rokamobility, a prepaid transportation card and terminal manufacturer and a subsidiary of Lotte Card, which led to an upward trend in its stock price. If the acquisition is completed, Kakao Pay's corporate value is estimated to rise to around 9 trillion KRW. Hee-yeon Lim, senior researcher at Shinhan Investment Corp., said, "If Kakao Pay acquires Rokamobility, growth potential is expected to expand due to increases in total payment volume (TPV) and sales, as well as offline merchant expansion," maintaining a 'buy' investment opinion and raising the target price to 73,000 KRW.

Hyundai Construction Equipment, a manufacturer and supplier of construction machinery, was identified as a promising stock due to expected continued demand centered on infrastructure investments in North America and emerging resource-rich countries such as Saudi Arabia and Indonesia. On the 22nd of last month, IBK Investment & Securities raised Hyundai Construction Equipment's target price from 58,000 KRW to 82,000 KRW. Researcher Sang-hyun Lee noted, "What is noteworthy is that there is a large market that is not heavily dependent on interest rates," adding, "Strong growth is expected in infrastructure, power plants or alternative energy sources, and manufacturing sectors."

Conversely, some stocks had their target prices lowered by securities firms due to expected underperformance. The stock with the largest target price decline over the past month was SoluM (-11.11%), followed by Clio (-9.4%) and SK IE Technology (-9.27%).

SoluM, a manufacturer of TV components and electronic shelf labels (ESL), posted an operating profit of 81.4 billion KRW last year, nearly tripling its performance compared to the previous year. However, due to an expected economic slowdown this year, the manufacturing sector is anticipated to be generally sluggish. Consequently, Heungkuk Securities lowered SoluM's target price from 32,000 KRW to 26,000 KRW on the 27th of last month, while maintaining a 'buy' investment opinion.