[Exclusive] KOSPI Rally Driven by Earnings: 6 out of 10 Listed Companies Surpass Expectations

Earnings Surprises in Semiconductors and Chemicals
Stock Gains Driven by Profit Improvements Beyond Samsung Electronics and SK hynix

The recent surge of the KOSPI index above the 7,000 mark has been attributed to a series of "earnings surprises" by listed companies. As the first-quarter earnings season wraps up this year, 6 out of 10 listed companies that have reported their results so far have exceeded market expectations. However, with geopolitical risks intensifying and a wave of profit-taking, the KOSPI index appears to be taking a breather.

On the 8th, as doubts arose over the conclusion of peace negotiations for the Middle East war and the three major U.S. indices simultaneously fell, the domestic stock market also started lower. An employee at the dealing room of Hana Bank headquarters in Jung-gu, Seoul, was monitoring the stock market and exchange rates. On that day, the KOSPI opened at 7,353.94, down 1.82% compared to the previous trading day. Photo by Jo Yongjun

On May 8, the KOSPI opened at 7,353.94, down 1.82% compared to the previous trading day, and as of 9:50 a.m., was trading at 7,390.15, down 1.33%. At the same time, the KOSDAQ was trading at 1,206.00, up 0.57%. The KRW-USD exchange rate opened at 1,458.5 won, up 4.5 won from the previous day, and was trading at 1,463.9 won.

Overnight, the New York stock market closed lower as uncertainty over peace negotiations between the U.S. and Iran came to the fore. On May 7 (local time), the Dow Jones Industrial Average closed at 49,596.97, down 313.62 points (-0.63%) from the previous session. The Standard & Poor's (S&P) 500 Index ended at 7,337.11, down 28.01 points (-0.38%), while the tech-heavy Nasdaq Composite Index closed at 25,806.20, down 32.75 points (-0.13%). The decline was particularly pronounced in semiconductor stocks: AMD fell 3.10%, Intel dropped 3.00%, and Micron lost 2.97%. UK-based semiconductor design company Arm plunged 10.1% amid mounting doubts over its production capacity for in-house artificial intelligence (AI) chips.

According to financial information provider FnGuide, as of May 6, out of 119 companies for which three or more securities firms had provided operating profit estimates, 73 posted operating profits above consensus (the market average forecast). By sector, companies that outperformed market expectations included Hotel Shilla (retail, 705.0%), POSCO Future M (chemicals, 289.7%), Hanwha Solutions (energy facilities and services, 184.4%), Ecopro BM (electronic equipment and devices, 108.3%), and Krafton (game software, 36.1%). Conversely, companies that fell short of consensus included Samsung SDS (IT services, -41.1%), Yuhan Corporation (pharmaceuticals, -18.8%), Hanwha Systems (commercial services, -17.9%), Samsung C&T (conglomerates, -12.9%), and KCC (building materials, -9.6%).

Hanwha Solutions recorded the largest positive surprise in first-quarter operating profit, reporting 92.6 billion won, which is 706% higher than the consensus estimate (11.5 billion won). Hanwha Solutions posted a profit in all business segments, including renewable energy, chemicals, and advanced materials. This was due to the normalization of local plant operations following the resolution of concerns over U.S. customs clearance, as well as structural profit improvements stemming from changes in U.S. policy and market conditions.

Hotel Shilla posted an operating profit of 20.4 billion won, 705.0% above the consensus estimate (2.5 billion won). In the duty-free division, the company focused on solidifying a stable business foundation through profitability-oriented management, while in the hotel and leisure division, the opening of new hotels and an increase in foreign tourists contributed to results.

POSCO Future M posted an operating profit of 17.7 billion won, 171.8% above the consensus estimate (6.5 billion won). In the battery materials business, sales of high-value-added cathode materials such as NCA/N87 increased, and in the basic materials business, robust results were driven by increased plant construction and efficiency improvements at lime (quicklime) facilities. This was followed by HD Hyundai Energy Solutions (127.3%), Ecopro BM (113.6%), Daewoo Engineering & Construction (110.8%), LG Household & Health Care (110.6%), L&F (93.3%), Simmtech (68.4%), and Taihan Cable (54.7%).

Samsung Electronics, which is leading the KOSPI rally, posted an operating profit of 57.2328 trillion won, exceeding consensus by 42.4%. SK hynix recorded an operating profit of 37.6103 trillion won, surpassing consensus by 3.3%. However, securities firms estimate that if incentive provisions are taken into account, actual operating profit could reach up to 42 trillion won. In that case, SK hynix would exceed consensus by as much as 15.4%.

Both companies are assessed to have entered a "super cycle" (boom period), as demand for general-purpose DRAM and high-bandwidth memory (HBM) has increased due to the proliferation of artificial intelligence (AI), alongside rising semiconductor prices.

There were also companies that reported results significantly below market forecasts due to an overall industry downturn. Daehan Steel posted only 100 million won in operating profit, 93.8% below the consensus (1 billion won). OCI Holdings posted operating profit of 10.8 billion won, 75.3% below the consensus estimate (43.9 billion won). Hyundai Steel posted 15.7 billion won in operating profit, 72% lower than the consensus (56 billion won). This was followed by S-1 Corporation (-64.9%), Samsung SDS (-61.2%), Yuhan Corporation (-60.2%), Haesung DS (-51.1%), Hyundai AutoEver (-47.8%), Hanwha Systems (-41.1%), and GS Engineering & Construction (-33.8%).

Ji Yong Han, a researcher at Kiwoom Securities, commented, "Noise from peace negotiations and the weakness of the Philadelphia Semiconductor Index in the U.S. are putting profit-taking pressure on domestic AI value chain stocks, leading to a pause in the rally. In the process, funds may rotate into underperforming sectors, such as defense stocks, which plunged the previous day." He added, "Rapid surges in stock prices over a short period can incentivize market participants to take profits. While expectations are growing for an end to the Iran war, it is also a timely reminder that consensus forecasts for KOSPI operating profit this year continue to be revised upward, led by semiconductors."

This content was produced with the assistance of AI translation services.