Eight out of 10 among South Korea’s 100 most valuable companies on the main Kospi bourse are projected to report poorer earnings than previous estimates for the first quarter, with some analysts predicting losses by two chip majors.

According to local market tracker FnGuide on Thursday, the operating income projection for the first quarter ending March has been lowered for 84.4 percent or 54 out of 64 companies listed in the top 100 market cap from the forecast made on Jan. 20, when the country reported its first confirmed case of coronavirus infection.

The first-quarter earnings estimate for Samsung Electronics Co., the world’s largest memory chip and smartphone maker, was cut by 5.4 percent to 6.4 trillion won ($5.2 billion) from two months ago. The revised income would be a 3.2 percent increase from the first quarter last year, but some brokerages even predict on-year fall.

“While Samsung Electronics’ smartphone and home appliance sales are expected to have slowed considerably, weaker earnings appear to be inevitable for its semiconductor and display businesses,” said Eo Kyu-jin, an analyst at DB Financial Investment. The brokerage forecasted Samsung Electronics’ operating profit to stop at 5.9 trillion won in the first quarter, down 4.6 percent from a year earlier.

Securities companies were even more pessimistic about SK Hynix Inc., another chip giant. They estimated the company’s first-quarter operating profit at 592.2 billion won, down 22.9 percent from the projection made two months ago. The revised estimate is 66.6 percent fall against a year ago period.

The average first-quarter earnings outlook for country’s largest automaker Hyundai Motor Co. was lowered 15.4 percent to 926.4 billion won.

The brokerages were most pessimistic on Korean Air Lines Co., the country’s largest flag carrier, cutting their earnings outlook nearly by half or 94.2 percent in just two months.

The earnings forecasts were also cut sharply for steel makers and rechargeable battery firms. The average outlook for Hyundai Steel was downgraded 61.2 percent, Posco 27.0 percent, Samsung SDI Co. 58.5 percent and LG Chem 44.3 percent.

Major oil refiners SK Innovation Co. and S-Oil Corp. are even projected to reverse to an operating loss in the first quarter.

Only 10 companies received an upgrade in outlook. They include liquor maker Hite Jinro Co. with 15.7 percent upward revision, instant noodle ramyeon maker Nongshim Co. with 10.3 percent, and mobile chap operator Kakao Corp. with 1.3 percent.

In respect to the downgrading in earnings forecast, the securities companies lowered their price target for 64.1 percent or 41 of top 64 Kospi-listed companies by market cap. The price target for the largest-cap Samsung Electronics shares were cut to as low as 63,000 won a piece from 70,000 won, and that of SK Hynix was adjusted down from the top end of 125,000 won to 104,000 won, at the lowest.

By Pulse

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