Stock Price Lower Than Liquidation Value
Recently, the Korean stock market has not seen any clear events leading to a rebound, and stock prices are turning to a correction. Accordingly, it is analyzed that the company should be interested in the stocks that have a high asset value but a low PBR.
On the 10th, the Maeil Business Newspaper, along with F & G Guide, had a good earnings outlook in 2H09, when the PBR was revised down to one-fold.
As a result, Shinsegae, SK Hynix and Lotte Fine Chemicals were among the promising investment groups. The P / B was above one-fold before July, but the stock price has fallen below the liquidation value along with the recent correction. These stocks are said to be attractively invested as earnings are expected to rise in 2H. A PBR of less than 1 means that the share price is less than the net asset value of the company’s book value.
In the case of Shinsegae, brokerage firms’ 12-month forward P / B has fallen from 1.02x on Jul 1 to 0.81x on 9th. Stock prices also fell 19.7% during the same period. However, it is expected that the duty-free shop in Korea will start its full-fledged recovery from July, and its earnings will increase in earnest in the near future. However, it is expected to start full-scale harvest next year. According to F & B guide, Shinsegae’s operating profit is expected to increase 5.1% YoY to W238.4bn in 2H. “Shinsegae has strong purchasing bargaining power and product planning ability as a major player in the traditional department store business,” said Yoo Min Kyung, a researcher at Kyobo Securities. “In the existing department store channel, which has weak growth potential, we expect a steady growth of 10% Will be a new growth engine. ”
It is also positive that the start of mid-autumn festivals on November 24 and the arrival of October national holidays and November military festivals will boost China’s stock holdings. Recently, the number of Chinese visitors has been increasing. In July, the number of Chinese arrivals stood at 410,000, up 46% from the same period last year.
“The Shinsegae Duty Free Shop in Myung-dong expects sales to reach 1.33 trillion won, a 45% increase from the previous year, proving the ability of the distribution powerhouse.” The entry into duty-free shops at Gangnam and Gangnam Duty Free stores will put a burden on profitability in the short term. But it is likely to become a stepping-stone for strengthening the bargaining power of purchasing by the increase of the market share and economies of scale in the medium and long term, and to advance overseas. ”
The PBR of SK Hynix fell to 0.9 times from the previous 1.1 times in July. Recently, the global investment bank (IB) released a series of negative reports on the semiconductor industry, and the share price also fell.
However, in the securities market, the downward trend seems to be excessive compared to the actual semiconductor industry. Rather, it is an opportunity to buy at a time when stock prices do not reach the liquidation value. Although DRAM prices are expected to fall slightly in 4Q, it is in line with market expectations and earnings growth will continue. F & G forecasts that operating profit of SK Hynix will increase by 50.7% YoY in 2H.
The PBR of Lotte Fine Chemical has fallen from 1.12 to 0.96, but it is expected that earnings will continue to rise in the second half of the year following the second quarter. In 2Q, Lotte Fine ChemicalÊs operating profit rose 118% YoY to W73.1bn.
Sales reached 355.3 billion won, up 10%. Revenue for the first half of this year has already surpassed the previous year’s results. Lotte Fine Chemical, which produces caustic soda that is not significantly affected by oil prices in the chemical industry, which is experiencing relatively more difficulties than last year due to rising oil prices, The recent share price has fallen due to the sluggish price of caustic soda, but it is analyzed that the stock price will turn into a rebound along with the price recovery in the second half.