HYBE, JYP, Hyundai Motor... "Target Price Downgrades" Flood In

Sharp Turn as KOSPI Rally Ends
Downgrade Reports Surge Since July
Disappointing Earnings and Valuation Pressures

As volatility in the domestic stock market has increased, securities firms have been issuing a flood of target price downgrade reports. Although target price upgrade reports dominated until June of this year, since July the number of downgrade reports has outpaced upgrades. Across core industries—such as media, electronic equipment and devices, as well as semiconductors and related equipment—market expectations among securities analysts are being lowered.

According to financial information provider FnGuide, the number of target price downgrade reports last month totaled 780, more than double the number of upgrades (383), outnumbering them by 397. From August 1st to 23rd as well, downgrade reports (571) far exceeded upgrades (304). This trend coincides with the drop in the KOSPI index, which fell from 9,114.55 points at the close on June 22 to 5,593.56 points as of July 30.

In fact, in the first half of this year alone, optimism about a bullish stock market meant that target price upgrade reports overwhelmingly prevailed. In January, there were 843 upgrade reports (compared to 216 downgrades); in February, 1,058 upgrades (115 downgrades), reflecting strong optimism. Between March and May, the number of monthly upgrade reports remained in the 800 to 1,000 range, and in June upgrades (257) still outnumbered downgrades (107).

By industry, from last month 1st through August 23rd, the largest number of downgrade reports were in media (including JYP Entertainment) and electronic equipment/devices (including LG Energy Solution), at 102. This was followed by semiconductors and related equipment (such as SK hynix) with 75, pharmaceuticals (such as GC Pharma) with 73, construction (such as GS Engineering & Construction) with 65, and auto parts (such as Hyundai Wia) with 64.

By individual stocks, JYP Entertainment saw the highest number of target price downgrades with 28 reports. This was followed by Hyundai Motor (22), Classys and HYBE (19 each), GS Engineering & Construction (18), and Netmarble (17). For JYP Entertainment, Yuanta Securities explained that Q2 results missed market consensus due to disappointing growth in younger artists and uncertainty surrounding TWICE's activities, making a significant share price rise less likely. Accordingly, they lowered their target price from 60,000 won to 55,000 won. On August 14, iM Securities also cut their target from 80,000 won to 60,000 won, citing the contract renewal season for TWICE and the upcoming military service for Stray Kids as reasons.

For Hyundai Motor, which ranked second, Samsung Securities adjusted the target price from 700,000 won to 650,000 won on August 7, reflecting sluggish domestic sales and tax and environmental regulations that are increasingly unfavorable for hybrid vehicles. DB Securities followed on July 27, lowering its target from 900,000 won to 700,000 won citing a broad contraction in market multiples and valuation adjustments.

For Classys, in third place, Yuanta Securities lowered its target price from 74,000 won to 50,000 won on August 18, stating that Q2 results fell short of market expectations. On August 13, DB Securities also cut its target from 68,000 won to 54,000 won, noting that sluggish domestic sales persist, and now is the time to seek export growth through local subsidiaries in Brazil and Japan and to push for entry into new markets such as China.

In the case of HYBE, BNK Investment & Securities lowered its target price from 460,000 won to 300,000 won on July 31 due to concerns about performance peaking from reliance on a few artists as well as governance-related reputation risks. On July 29, Samsung Securities reduced its target from 300,000 won to 255,000 won owing to increased market volatility, profitability concerns, and conservative earnings estimates resulting from stronger contributions from top-tier artists.

For the two major semiconductor companies, Samsung Electronics and SK hynix, there were 6 and 9 downgrade reports, respectively. For Samsung Electronics, Kiwoom Securities lowered its target price from 390,000 won to 350,000 won on August 10, reflecting adjusted earnings forecasts and changes in market interest rates. Shinhan Investment Corp. also cut its target price from 500,000 won to 450,000 won on July 31. Kim Hyungtae, a research analyst at Shinhan Investment Corp., explained, "To address the excessive stock price gap, we have downgraded the price-to-book ratio (PBR) multiple, referencing the average of DRAM peers."

Regarding SK hynix, Kiwoom Securities lowered its target price from 2,500,000 won to 2,100,000 won on August 10, citing revised earnings estimates in response to expectations of falling general DRAM prices and fluctuations in market interest rates. Hanwha Investment & Securities also cut its target from 4,300,000 won to 3,150,000 won on July 30. Hanwha Investment & Securities researcher Park Junyoung commented, "If earnings drop sharply due to a specific reason, it may be considered a correction driven by the company's fundamentals, but currently there are no such signs. Nevertheless, a downgrade was made to reflect the recent broad correction in stock prices across the market."

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