Major securities firms have reportedly downgraded the target prices of more than six out of ten domestic listed companies. The risks posed by the tariff war anticipated by the U.S. Trump administration and the slowdown in the domestic economy, along with the aftermath of the martial law situation, seem to be hindering the busy stock market.
According to financial information provider FnGuide on the 25th, as of the 20th of this month, out of 281 stocks for which three or more securities firms proposed target prices, 179 stocks (63.7%) had their target prices downgraded compared to the end of September, while 100 stocks (35.6%) had their target prices upgraded. The remaining two stocks saw no change in their target prices.
The stock with the most significant downgrade in target price is semiconductor substrate manufacturer ISU PETASYS. The average target price for this corporation was reduced by 50.1%, from 67,250 won at the end of September to 33,571 won as of the 20th of this month. It is interpreted as a consequence of the announcement of its intention to acquire JiO, a manufacturer of secondary battery materials, while pursuing a capital increase in response to expectations that the company's fourth-quarter earnings will fall short of predictions.
ISU PETASYS announced on the 8th of last month, after the market closed, that it had decided to carry out a capital increase of 550 billion won to acquire JiO's equity. This amount accounts for 31.8% of the existing number of issued shares. As reactions of disbelief poured in, the company's stock price plummeted. The Financial Supervisory Service has repeatedly requested a corrected report on the securities registration statement for the capital increase that ISU PETASYS submitted.
The stock with the second-largest downgrade in target price is the cosmetics company C&C International. This company's target price decreased from 135,000 won to 86,429 won, a drop of 36.0%. This appears to reflect a slowdown in growth due to poor export performance. Following C&C International are companies such as Simtech, Wontek, Wonik QnC, Doosan Tesna, and Clio.
By sector, four of the top ten stocks with the largest target price drops are semiconductor-related corporations, and there are three cosmetics-related stocks. The cosmetics sector is interpreted to reflect concerns about a slowdown in Chinese consumer spending and the peaking out of U.S. cosmetics exports.
The stock with the highest increase in target price is the entertainment corporation Dear U. It was upgraded by 37.5%, from 33,000 won at the end of September to 45,375 won as of this month. Following Dear U is Yuhan Corporation, which recently announced a strong performance for the third quarter due to the U.S. launch of the lung cancer treatment "Lazertinib" (product name: Recorra). Yuhan Corporation's target price increased from 127,273 won to 171,111 won, a rise of 34.4%.
As the economic situation is unlikely to improve next year, target price downgrades could increase in the near term. Lee Chang-yong, governor of the Bank of Korea, attended a briefing on the assessment of the inflation target operation for the second half of 2024 on the 18th of this month at the Bank of Korea's branch in Myeongdong, Seoul, and stated regarding next year's growth rate, "I initially thought it would be 1.9%, but the budget passed by the National Assembly is expected to have a tightening effect of about -0.06 percentage points, which has increased downward pressure when considering various issues like fiscal matters."