Expansion of Shareholder Returns through Value-Up and Others
Reduction of Discount Rate in the Korean Stock Market
Ebest Investment & Securities raised the KOSPI band on the 4th from the previous 2320~2650 (presented in October 2023) to 2480~2870.
Researcher Shin Jungho of Ebest Investment & Securities stated, "The basis for the KOSPI band upgrade is the expansion of shareholder returns due to value-up and the upward revision of earnings estimates," adding, "First, considering value-up, we expect a partial easing of the discount on the Korean stock market (8.5%) due to increased awareness of shareholder returns and an expanded dividend payout ratio."
Researcher Shin explained, "Investor interest in the Korean stock market's undervaluation has increased due to the global economic expansion cycle, the US no-landing issue, and domestic value-up programs improving return on equity (ROE)."
Researcher Shin said, "Although there are valuation controversies and checks on FOMO (fear of missing out when everyone else is making money), the levels are still not extreme," adding, "Even without a rate cut by the US Federal Reserve (Fed), the US economy is approaching an opportunity to escape the manufacturing bottom and rebuild inventories."
Additionally, Researcher Shin raised the 2024 net profit estimate to 157 trillion won (11% lower than the current consensus) reflecting expectations of demand recovery in the second half and the manufacturing inventory cycle.
Researcher Shin analyzed, "With all sectors having leveled up, the future issue will be selective rather than a mutually exclusive approach of 'growth vs. value'," and added, "In value stocks, we present stocks with potential for expanded shareholder returns considering value-up programs as stocks of interest." He further added, "In growth stocks, we present stocks of interest considering the nature of growth stocks and turnarounds."
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