As the KOSPI extended its record-breaking run this year, brokerages have been racing to raise target prices for Korean listed companies. For some stocks, share prices have risen faster than the market expected, prompting brokerages to lift their targets only belatedly.
According to financial data provider FnGuide, a total of 211 reports raised target prices this month through the previous day. Reports that lowered target prices numbered 72, a difference of nearly threefold. The increase in target-price upgrades is seen as a natural consequence of the KOSPI breaking through 7,000, 8,000 and 9,000 in succession this year, buoyed by a semiconductor super cycle.
The stock with the largest target-price upgrade this year was Daewoo E&C. Daewoo E&C's average target price jumped 673%, from 4,400 won at the end of last year to 34,000 won this month. The increase reflected not only growing expectations for reconstruction demand following the recent ceasefire agreement between the United States and Iran, but also the momentum from its nuclear power plant contract in the Czech Republic.
"Winning the Dukovany nuclear power plant order in the Czech Republic is significant in that it marks Daewoo E&C's first overseas nuclear power project," said Lee Hye-jin, an analyst at Daishin Securities. "Based on its experience executing domestic nuclear power projects, the company is expected to prove its overseas nuclear construction capabilities and expand its role within Team Korea. If the project is carried out successfully, opportunities to participate in the global nuclear power value chain could increase." Accordingly, she set a new target price for Daewoo E&C at 28,000 won. Given that Daewoo E&C's share price stood at 21,250 won as of the 19th of this month, this implies additional upside potential of about 31.76%.
The second-most upgraded stock was Samsung Electro-Mechanics. Its target price rose sharply by 513%, from 301,571 won to 1,848,600 won. Analysts attributed this to expectations for earnings improvement driven by rising prices of multilayer ceramic capacitors (MLCCs) for artificial intelligence. Next were SK Square (363,000 won to 1,401,429 won), the largest shareholder of SK hynix, followed by SK hynix (756,231 won to 2,835,000 won).
In the case of Samsung Electro-Mechanics in particular, the share price soared in a short period, with some brokerages raising their targets only belatedly. Meritz Securities raised its target price for Samsung Electro-Mechanics from 700,000 won to 1.02 million won on the 1st of last month, but the closing price on the trading day immediately before the upgrade (April 30) was 832,000 won, already above the previous target. The firm then raised the target again to 1.6 million won on the 20th of the same month, yet the closing price a week earlier (May 13, 1,029,000 won) had already exceeded the target of 1.02 million won. After successive target-price upgrades, the stock more than doubled in about a month.
Daishin Securities also adjusted its target price for SK Square from 760,000 won to 1 million won on April 27 this year, then raised it to 1.5 million won on the 24th of last month, a month later, and lifted it further to 1.87 million won on the 18th of this month. Over the same period, SK Square's share price jumped 116%, from 789,000 won to 1.7 million won.
