reports
- Hyun Wook Park
KISCO Holdings (001940.KS): Lower-than-expected1Q but valuation attrac...
- 1Q18 operating profit came in at KRW6.2bn, which was lower than our estimate. - Subsidiaries KISCO (104700.KS, BUY; fourth-largest rebar maker in Korea; 40.8% ownership) and Hwanyoung Steel (sixth-biggest rebar producer in Korea; 83.5% ownership) help to keep cash flow pumping. - We maintain BUY and our target price of KRW17,800 (pre-split price KRW89,000).
- Jin Sang Kim
Hanwha Life Insurance (088350.KS): 1Q18: strong underwriting profit, w...
Parent net income for 1Q18 came in at KRW114.6bn, missing the consensus of KRW136.1bn. Underwriting profit (mortality margin plus expense margin) stayed firm but 1) underwriting net revenue fell because of a decrease in the top-line; and 2) investment income contracted due to a falling investment yield. Nevertheless, improving policy reserve provisions is positive.
- Jin Sang Kim
ING Life Insurance (079440.KS): Interest margin and mortality margin l...
The firm’s growth strategy based on its industry-high capital ratio and unique FC strategy remains valid, in our view. Solid and continued growth of protection-type APE is also positive. We maintain BUY and our target price of KRW65,000.
- Dongjin Kang
KOGAS (036460.KS): Entering a virtuous cycle
- 1Q18 results met consensus expectations, backed by growing earnings from GLNG and regulated businesses. - The rate of return for regulated businesses should grow further in 2019 on higher interest rates and a steadily increasing rate base. - Overseas earnings should pick up further going forward on the expanding profitability of GLNG and earnings recognition of Prelude FLNG (2019) and Mozambique FLNG (2022). - The expected FIDs for LNG Canada and the Mozambique...
- Yang Ku Kang
Celltrion (068270.KS): Rapid growth still ongoing
- We maintain our BUY and our KRW360,000 target price on Celltrion in light of the likely US sales approval of Truxima and Herzuma in 2H18 and the long-term momentum to come from subcutaneous Remsima and Inflectra. - 1Q18 review: Results were in line with market expectations as the market share of Truxima, a rituxan biosimilar which made a European debut in 2017, expanded more rapidly compared with Remsima. Sales came in at KRW245bn (+25% YoY), operating profit at KRW116.5bn (...
- Jin Sang Kim
Samsung Life Insurance (032830.KS): Loss ratio recovery speed after 1Q...
1) Investment highlights - Consolidated net income for 1Q18 came in at KRW389.9bn, missing the consensus of KRW429.4bn, because: 1) underwriting profit remained in the red for a second consecutive quarter due to an increase in the loss ratio; and 2) investment income fell by 2.5%p as investment yield declined. What is positive though is a considerable improvement in policy reserve provisions (-33.3% YoY).
- Sung Jin Hwang
Kakao (035720.KS):Fostering The Growth Of New Businesses
We saw growth across all divisions in 1Q18, which resulted in sharp top-line growth and record quarterly revenue. However, margins contracted because of labor and marketing cost hikes related to new businesses. - Movements to facilitate the growth of Kakao platforms will continue through 2018. In addition to movements to bring about the advancement of the ad platform, there will be more concrete efforts to bolster the growth of Kakao Bank, Kakao Mobility, and Kakao Pay. Cost i...
- Jong-ryeol Park
Hyundai Home Shopping (057050.KS): Earnings momentum fizzling, lower T...
- We believe top-line growth will continue this year, backed by growth in mobile and T-commerce. - Operating profit, however, will likely fall YoY due to a change in accounting standards. - We reduce our target price to KRW150,000 to reflect our downward earnings adjustment.
- Jong-ryeol Park
GS Retail[007070.KS/M.PERFORM] : Shop around for better bargains
We revise down our 2018 earnings forecasts in light of lower-than-expected 1Q18 earnings results. The disappointing results have largely to do with an increase in subsidies paid out to the franchisees of GS Convenience Stores after minimum hourly wages were increased.- Despite the above negatives, we find the improving earnings of Parnas Hotels positive.- We maintain Marketperform and our target price of KRW40,000 on GS Retail.
- Jung-hwan Sung
- Peter Yoo
Hana Tour (039130.KS): 1Q18 to meet consensus
- We maintain BUY and our target price of KRW140,000 on Hana Tour. - Outbound travel was slow in 1Q18 as the Pyeongchang Winter Olympic Games fell in February. - Losses at the DFS are likely to be less than KRW5bn and we expect losses to gradually narrow further going forward. - As THAAD-related tensions ease, earnings should recover in 2018.
- Greg Roh
Samsung Electro-Mechanics (009150.KS): Bright road ahead for MLCC
We raise our six-month-forward target price from KRW133,000 (2.2x 2018F BPS) to KRW143,000 (2.4x 2018F BPS in reflection of improving ROE) and maintain our rating at BUY. 1Q18 consolidated sales are expected to come in 2.5% below our estimate at KRW1.9tn because of sluggish ACI sales caused by the US strategic client’s inventory cuts. However, consolidated operating profit is forecast to beat our forecast by 4% to come to KRW141bn on MLCC price hikes.
- Jung-hwan Sung
Hanssem (009240.KS): Deconstruction
Sales on a parent basis slipped 5.5% YoY to KRW467.5bn and operating profit fell 56.3% YoY to KRW17.8bn in 1Q18. - Margins fell sharply as well, due to a decrease in B2C sales, higher cost ratio stemming from B2B sales growth, and escalating marketing costs amid efforts to boost sales. - We maintain Marketperform but reduce our target price from KRW170,000 to KRW155,000.
- Hyun Wook Park
Hyundai Steel (004020.KS): Offloading non-core asset to enhance shareh...
As part of efforts to resolve Hyundai Motor Group’s cross-shareholding structure, Hyundai Steel (HDS) decided to sell its stake in Hyundai Mobis to the group’s chairman Chung Mong-koo (MK) and his son and vice chairman Chung Eui-sun (ES). It is a very meaningful move as it helps realize the value of a non-core asset. The proceeds from the sale will be used to repay debt. It will also have positive impacts on the shareholder return policy and stock performance going forward. We maintain BU...
- Jong-ryeol Park
Hansol Paper (213500.KS): Better-than-expected 1Q18 likely
We believe Hansol Paper will report higher-than-expected earnings for 1Q18 as it managed to pass on higher raw material costs (e.g., pulp) onto paper ASP. - The company’s diversified product portfolio (printing paper 40% of sales, industrial paper 30%, and specialty paper 30%) is also a factor that contributes to earnings improvement. Industrial/specialty paper margins widened on the back of growing market shares. - We raise our target price to KRW26,000, in line with ou...
- Yang Ku Kang
Yuhan Corp: 1Q18 Preview: Pipeline Value To Be Highlighted
- We expect 1Q18 results to be in line with market expectations as outpatient prescription growth is offset by slower API exports. On a parent basis, we expect Yuhan Corp to report KRW359.5bn in sales (+2.9% YoY, -3.7% QoQ) and KRW23.7bn in operating profit (-14.4%, +70.9% QoQ) on a 6.6% operating margin. - We maintain BUY as we see its key pipelines reviving out-licensing momentum in the mid to long term. - The stock trades at discounts to larger pharmas. Given the pote...
- Yang Ku Kang
Samsung Biologics (207940.KS): Q18 preview, look from a long-term pers...
- We maintain BUY on Samsung BioLogics given the prospect of rising biologics CMO demand in the mid/long term and the expected normalization of its plant 3 facility in 4Q18. We adjust up our target price from KRW510,000 to KRW680,000 considering the following: 1) global biologics CMO/biosimilar peer multiples remain high; 2) subsidiary Samsung Bioepis’s key pipeline drug obtained a European sales license; and 3) the value of SAIT101 developed by Archigen Biotech, its JV with AstraZeneca,...
- Greg Roh
Samsung Electronics: Is the IM-driven earnings surprise sustainable? W...
We maintain BUY and our six-month-forward target price of KRW3,300,000 (the average of 10x 2018F EPS and 1.7x 2018F BPS) on Samsung Electronics. Samsung announced preliminary 1Q18 revenue of KRW60tn and operating profit of KRW15.6tn. Revenue was 4.3% below our estimate but operating profit was a surprise, beating the forecast by 6.8% By division, semiconductor posted an estimated operating profit of KRW11.3tn, IM KRW3.7tn, display KRW0.2tn, and CE KRW0.46tn. The semiconductor division’s ...
- Jin Sang Kim
Hana Financial Group (HNFGF): Wake Up, Time To Buy
Net income for 1Q18 is expected to beat the consensus estimate of KRW578.2bn to come in at KRW590.3bn. NIM likely increased by 3bps QoQ and loans grew 1.2% QoQ. Credit and S&G costs also stabilized. The stock is undervalued at 0.51x P/B and 6.0x P/E considering its ROE (8.7%) and dividend yield (3.9%).
Hite Jinro: Attractive Even From A Conservative View
Losses from the beer business are expected to narrow thanks to strong sales of FiLite and a low base stemming from early retirement payments in 1H17. We keep our target price unchanged at KRW28,000, but raise our rating to BUY as recent corrections make the valuation attractive. Even from a conservative perspective, we believe Hite has the most earnings visibility in the sector, and expect shares to rebound in the short term.
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