KOSPI, Profit Growth Expected Until Q3... Q4 Remains a Variable

Q2 Semiconductor and Non-Ferrous Metals-Centered Earnings Market

Shinhan Investment Corp. analyzed on the 10th that the KOSPI index is currently passing through the Q2 earnings season, and profit growth is expected through Q3. However, it added a caveat that Q4 earnings may fall short of estimates.

Strategist Nodonggil said, "Considering exports converted to Korean won, the Q2 earnings estimates are close to being underestimated, and a turning point in profit estimates is not expected to appear immediately," adding, "The earnings-driven sectors correspond to those with the highest operating profit growth rates and change rates compared to the previous quarter, such as semiconductors and non-ferrous metals."

He also noted, "When overall profits meet expectations, sectors that could lead a relief rally are worth paying attention to," adding, "Although expectations were low, sectors recently showing upward revisions include transportation, securities, insurance, software, and IT hardware." However, energy-sensitive stocks and domestic consumption sectors were observed to be sluggish.

While Q3 is expected to see additional profit growth, Q4 may fall short of estimates due to seasonal factors. Strategist Nodonggil pointed out, "According to the current outlook, it is difficult to avoid falling short of estimates in Q4," and added, "Although Q3 margins appear high, this is judged to be due to quarterly estimation errors in some sectors rather than widespread overestimation."

He said, "Q3 can expect further increases from the perspectives of earnings per share (EPS) and price-to-earnings ratio (PER)," and noted, "Q4 is a period to prepare for volatility due to the possibility of falling short of estimates as margins in communication, materials, energy, and consumer staples seasonally weaken."