The Upcoming Q1 Earnings Season Led by Semiconductors

Q1 Earnings Season Begins with Samsung Electronics' Preliminary Results Announcement on the 5th
SK Hynix Significantly Raises Operating Profit Consensus Compared to a Month Ago
Semiconductor Sector Expectations Rise, Driving Stock Prices Soaring
Samsung Electronics Touches 85,000 Won Intraday

With Samsung Electronics set to announce its preliminary earnings for the first quarter of this year on the 5th, marking the start of the Q1 earnings season, expectations for semiconductor stocks are rising. This is because semiconductor stocks, which had been sluggish, are expected to show a full-fledged earnings recovery in the first quarter of this year. The market has already reflected these expectations, with related stocks soaring.

According to financial information provider FnGuide on the 3rd, SK Hynix's first-quarter operating profit consensus (average forecast by securities firms) was revised upward by 32.3% from 1.1144 trillion won a month ago to 1.4741 trillion won. Among 173 KOSPI-listed companies (excluding insurance) with consensus estimates from three or more institutions, this was the largest upward revision. SK Hynix's first-quarter sales are expected to increase by 135.4% year-on-year, with operating profit and net profit both expected to return to positive territory.

There are even forecasts that SK Hynix's first-quarter operating profit will exceed market expectations and reach the 2 trillion won range. Dongwon Kim, a researcher at KB Securities, said, "SK Hynix's first-quarter earnings are expected to show significant improvement, with sales of 12.2 trillion won and operating profit of 2.1 trillion won, greatly surpassing the consensus." He explained, "The first-quarter DRAM operating profit is expected to be 2.5 trillion won due to price increases amid strategic supply reductions to improve profitability, and NAND operating loss is estimated to decrease by 1.3 trillion won from the previous quarter to 400 billion won due to price increases and a reduction in the proportion of low-priced products despite shipment declines."

Samsung Electronics' earnings forecasts have also been revised upward. The first-quarter operating profit consensus for Samsung Electronics is 5.0639 trillion won, up 8.2% from 4.6812 trillion won a month ago. Samsung Electronics' first-quarter sales are expected to increase by 13.6% year-on-year, with operating profit and net profit projected to surge by 691.0% and 205.6%, respectively. Youngho Ryu, a researcher at NH Investment & Securities, said, "Samsung Electronics' first-quarter earnings are expected to meet the recently revised upward market expectations," adding, "The more positive-than-expected results are due to improved memory segment earnings driven by rising memory prices."

By industry, earnings expectations for the semiconductor sector have also risen significantly. The first-quarter operating profit for semiconductors and related equipment was revised upward by 12.6% from a month ago to 6.6206 trillion won, marking the largest upward revision.

Due to the strong earnings expectations for semiconductor stocks, market attention is expected to focus on Samsung Electronics' first-quarter earnings announcement on the 5th. Jiyoung Han, a researcher at Kiwoom Securities, said, "Samsung Electronics' preliminary first-quarter earnings will be highly important as a preview to gauge the first-quarter earnings of major domestic industries such as semiconductors."

Stock prices are also soaring on the back of earnings expectations. Samsung Electronics reached an intraday high of 85,000 won yesterday, marking a 52-week high. SK Hynix also broke its 52-week high again by surpassing 190,000 won intraday on the 1st.

There are forecasts that the semiconductor sector will continue to dominate during the first-quarter earnings season. Myunggan Yoo, a researcher at Mirae Asset Securities, said, "At least during the first-quarter earnings season, the concentration on semiconductors will continue," adding, "Looking at the concentration index for the semiconductor sector alone, it has risen from about 1.3 at the beginning of this year to 2.1, increasing concerns about concentration." The concentration index is calculated based on the standard deviation and correlation coefficient of returns among stocks within the sector, valuation, earnings revision ratio, and credit balance ratio. He continued, "However, it is not the time to reduce the semiconductor sector's weighting. Considering the increase in semiconductor exports and the pace of upward revisions in earnings forecasts, there is still significant room for further earnings improvement."