Korean Analysts Are a Very Optimistic Bunch of People
Watch the video with Andrew Stotz or read Watching the Street: Korea below.
Consensus Recommendations: Korea
What are analysts saying about Korea? The first thing we look at is consensus recommendations. From the chart on the top right in the slide below, we can see that analysts in Korea, relative to other countries in Asia, have turned from pessimism to optimism over the last year.
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In fact, once they get over the blue bar, the neutral moves to buy, which signals that analysts in Korea are the most optimistic they’ve been in a long time.
Two financial sector companies, Meritz Securities and Daishin Securities, are among the companies with the most positive recommendations in Korea.
If we look at the Samsung group, it has two companies on the list with the most negative recommendations. That’s both Samsung Engineering and Samsung Heavy Industries.
Consensus Earnings Estimates: Korea
If we continue on and look at consensus earnings estimates for Korea, the chart on the top right in the slide below shows the red bar that stands for consensus estimates that analysts have made versus the actual EPS. It’s a massive gap.
From 2012 to 2015, analysts estimated that earnings would grow by 30% or more in Korea. The actual EPS growth was never above 10%. Korean analysts are a very optimistic bunch of people. For 2016, analysts are a bit more pessimistic though and forecasted only a 22% growth in earnings.
While Samsung companies in the industrial sector have negative recommendations, two of its group companies have the highest EPS growth estimates. What we can see on the lowest consensus EPS estimates is that Samsung also has companies on the lowest side. We can see that these companies have a 50% to 100% negative EPS forecast by analysts on the right side.
What we can see on the lowest consensus EPS estimates is that Samsung also has companies on the lowest side. We can see that these companies have a 50% to 100% negative EPS forecast by analysts on the right side.
Consensus Target Prices: Korea
If we continue on and look at consensus target price, what we’re going to see is that analysts set a target price, which gives about a 26% upside. Expected return implied by target prices are in an uptrend for the first time since 2015. A slightly positive return so far in 2016 has driven analysts to predict even higher returns in the coming 12 months.
Expected return implied by target prices are in an uptrend for the first time since 2015. A slightly positive return so far in 2016 has driven analysts to predict even higher returns in the coming 12 months.
Among the highest target price, expected return is Cuckoo Electronics, the rice-cooker maker, with a 70% market share. These rice cookers are a “must buy” for Chinese tourists. We can also see the lowest consensus target price companies with companies like Dio and Hyundai Rotem. These companies have a downside of 24% and 21%, respectively, on target prices.
We can also see the lowest consensus target price companies with companies like Dio and Hyundai Rotem. These companies have a downside of 24% and 21%, respectively, on target prices.
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