Securities firms revise corporate outlook upward

Securities firms are increasing their estimations of major KOSPI-listed companies` second quarter and annual financial performance, with many of the companies` first quarter results exceeding original expectations.

According to local financial information provider FnGuide, yesterday, the average of local brokerages` estimations of 273 listed companies` operating profit and net profit for the second quarter has been raised respectively by 4.46 percent and 1.73 percent, from a month earlier.

The figures for their annual performance have also raised 4.19 percent and 3.29 percent, respectively. "The figures had been decreased until March, but the unexpectedly strong earnings at big firms are pushing the figures upward," Sung Jin-kyung, a market analyst at Daishin Securities, said in a recent report.

Last week, LG Electronics posted an operating profit of 437.2 billion won ($325.8 million), 201.7 percent higher than the market forecast of 144.9 billion won, while market leader Samsung Electronics posted a net income of 620 billion won, a turnaround from the 22.2 billion won loss in the fourth quarter of last year, although its net profit was down 72 percent year-on-year.

The securities industries have thus readjusted their projections for the related companies` operating profit for fiscal 2009, including that of LG Electronics, which has increased to 1.32 trillion won from 726.6 billion won in March and Samsung Electronics (2.31 trillion won from 1.74 trillion won).

The projection for each of Hyundai Heavy Industry and Hyundai Motor`s annual operating profits has also been slightly raised. Although Hyundai Motor`s operating profit for the previous quarter has been dropped by over 70 percent year-on-year, its market share in the United States for the first quarter was 4.9 percent, a 1.9 percentage point increase from a year before.

Industry specialists, however, point out that such unexpectedly strong performances have also been due partly to the overall high won-dollar exchange rate over the past few months.

"Although the country`s export revenue dropped by as much as 14.2 percent between November and February, the exchange rate increased by 48.4 percent over the time, masking the poor performances of local exporters," Lee Si-wook, a researcher of Korea Development Institute said in a report.

The recently declining won-dollar rate will, some specialists expect, deprive local exporters of much of their price competitiveness. "I`m afraid the financial figures of companies, if misinterpreted, will mislead the country to another round of crises," Lee Hang-koo, a manager of the Korea Institute for Industrial Economics & Trade, added in the report.

Meanwhile, financial analysts predict the local stock market will face a correction this week, as investors take profits from recent gains, buoyed by better than expected first-quarter corporate earnings. "Investors may take profits from next week`s gains that are forecast to be sparked by good corporate earnings and improved economic indicators," Ryu Ryong-seok, an analyst at Hyundai Securities, said in a report.

The benchmark KOSPI rose 1.88 percent last week from the previous week to close at 1,354.10 on Friday.

By Lee Yong-sung



(danlee@heraldm.com)