Semiconductor-Excluding Sectors Face Downward Revisions; Q3 Profits Decline Without Industry Giants
Although the operating profit of KOSPI-listed companies is projected to increase by 44% next year compared to this year, profit forecasts for 19 out of 26 sectors have actually been lowered. In the third quarter of this year, the combined operating profit growth of the two major semiconductor firms exceeded the total growth estimate for the KOSPI 200. Analysts suggest that the semiconductor boom is failing to translate into broad-based performance improvements for domestic firms.
According to Kiwoom Securities on the 12th, the 2027 operating profit forecast for KOSPI-listed companies rose 6.8% from 1,347 trillion won in early October to 1,439 trillion won recently. With the 2024 operating profit forecast also adjusted upward from 989 trillion won to 998 trillion won during the same period, the projected growth rate for next year jumped from 36.2% to 44.2%.
However, the outlook varies significantly by sector. Excluding semiconductors, the combined operating profit forecast for the remaining 25 sectors has been lowered by approximately 7.9 trillion won, with downward adjustments occurring in 19 of the 26 total sectors. The profit growth expectations for semiconductors have effectively masked the sluggishness in other sectors, inflating the overall KOSPI performance outlook.
The operating profit forecast for the automotive sector was lowered by 13.0%, a result of increased raw material and promotional costs compounded by exchange rate impacts. The securities sector suffered from a decline in trading volume, while the chemical, non-ferrous metal, and timber sectors saw their outlooks dragged down by rising cost burdens and falling product prices.
Conversely, the energy sector, buoyed by strong refining margins, saw an upward revision of 12.3%, while the IT hardware sector, driven by demand for AI server components, rose by 8.5%. The transportation sector also showed relatively favorable performance expectations due to strong freight rates.
Excluding the Two Semiconductor Giants: Q3 Performance Also Slips
The concentration of performance improvements in the semiconductor sector was also evident in the recently announced third-quarter results.
According to an analysis released by BNK Securities on the 2nd, the operating profit growth of Samsung Electronics and SK hynix in the third quarter totaled 40.7 trillion won. This figure exceeds the estimated 25.3 trillion won total operating profit growth for the entire KOSPI 200.
Excluding these two companies, the combined operating profit of the remaining firms is estimated to have decreased by approximately 15.4 trillion won. The performance improvement of large-cap semiconductor stocks has offset the profit declines of other companies.
The number of companies failing to meet market expectations has also increased. According to Kiwoom Securities, the proportion of KOSPI companies whose third-quarter operating profit exceeded market expectations was 47.8%, down 17.4 percentage points from 65.2% in the second quarter.
The margin by which profits exceeded expectations also narrowed. While operating profits beat market estimates by an average of 9.5% in the second quarter, that figure dropped to just 3.0% in the third quarter. Net profit fell 19.6% short of market expectations, indicating that, contrary to the strong performance in select sectors, the overall pace of profit improvement across companies is slowing.
A gap is also widening between corporate profit forecasts and stock price trends. According to Kiwoom Securities, while the 12-month forward earnings per share (EPS) forecast for the KOSPI has been raised by 16.0% over the past three months, the forward price-to-earnings ratio (PER) has fallen by 31.5%. This suggests that while expected corporate profits are rising, the valuation multiples assigned by the market are declining.
Kiwoom Securities' analysis of KOSPI 200 profit forecast changes shows that sectors with improved outlooks for both the fourth quarter of this year and next year are limited to semiconductors, IT hardware, and transportation.
Kiwoom Securities advised that as the number of sectors showing performance improvement is limited, investors should narrow their focus to companies with high profitability and stable profit outlooks.
Choi Jae-won, a researcher at Kiwoom Securities, stated, "We are in a phase where stock prices are driven more by valuation adjustments than by earnings," adding that it is necessary to pay attention to companies with high profitability and performance stability.
