As the first quarter (January to March) earnings announcement season approaches, concerns are growing over domestic growth slowing and uncertainties regarding the tariff policy of the Donald Trump administration. This has led to speculation that stocks with notable growth may gain attention.
According to financial information provider FnGuide, a total of 104 stocks have been presented with earnings forecasts by three or more securities firms. Among these, only 34 have seen their operating profit expectations rise compared to the beginning of the year for the first quarter. Looking at the operating profit forecast for the second quarter (April to June), only 39 out of 100 stocks have shown improvement compared to the beginning of the year, which is less than those that have not.
The market believes attention should be focused on the second quarter's earnings rather than those of the first quarter. This is because when the mutual tariff policy of the Trump administration is announced on the 2nd, it is likely to have a significant impact on corporate performance.
The representative stock with optimistic expectations for the second quarter is Hanwha Aerospace. Securities firms have raised Hanwha Aerospace's second quarter operating profit forecast from 379.4 billion won at the beginning of the year to the current 579.5 billion won, an increase of 52.7% (20.01 billion won).
The company with the highest operating profit growth rate is Wonik IPS, a semiconductor equipment manufacturer. Wonik IPS's second quarter operating profit forecast is 22 billion won, which is a 79.8% (9.8 billion won) increase compared to the beginning of the year.
In terms of the increase, Korea Electric Power Corporation is the most notable. Securities firms have raised Korea Electric Power's second quarter operating profit forecast from 1.9067 trillion won at the beginning of the year to the current 2.2050 trillion won, a 15.6% (298.3 billion won) increase.
Emart, Hyundai E&C, KT, and DL E&C are also stocks that have seen their second quarter operating profit forecasts rise compared to the beginning of the year.
On the contrary, Hanwha Solutions, NCSOFT, POSCO FUTURE M, LG CHEM, LG Energy Solution, and Daeduck Electronics have been listed as stocks with lowered operating profit forecasts compared to the beginning of the year. Nexon Games, Kakao Games, LOTTE Energy Materials, SIMMTECH, L&F, and Samsung SDI have also reversed their expectations from a profit outlook to a loss forecast for the second quarter.
However, there could be a lag before upward revisions of earnings forecasts translate into stock price movements. Kim Jong-young, a researcher at NH Investment & Securities, noted, "Many stocks with recent upward earnings estimates belong to sectors that are sensitive to the U.S. economy and policy," and added, "The stock performance of growth stocks may appear after annual earnings estimates are adjusted following the first quarter earnings announcements."
Due to the resumption of short selling, stocks among growth stocks that have high valuation burdens are also expected to have challenges in short-term returns. Since 2016, it has been reported that stocks with improved performance and profitability have shown lackluster stock returns during a 60-day period of rising borrowing balances, attributed to the so-called 'pre-reflection' effect of concentrated short selling.
There are also recommendations to focus on turnaround stocks among growth stocks. Kim Min-kyu, a researcher at KB Securities, stated, "As stock transactions start to decline, the performance of growth stocks suffers, and relatively stable stocks that can be invested in for the long term tend to outperform the market."