Korea Investment & Securities Co. raised this year's KOSPI target to 5,650 points from 4,600, reflecting profit growth led by semiconductors. It set the lower bound of the index at 4,100 points.
Kim Dae-jun of Korea Investment & Securities Co. on the 7th revised this year's KOSPI target to 5,650 points from 4,600. As the reason for the higher outlook, Kim cited profit growth at corporations centered on semiconductors.
Kim said, "As of June last year, the KOSPI 12-month forward earnings per share (EPS) is confirmed at 435 points, 28.8% higher than at the time of the outlook in October last year," adding, "We apply the EPS rate of change to derive the new forecast."
The appropriate price-earnings ratio (PER) used to estimate the target is 13 times. The assumption reflects payout ratios rising over the next three years to 21.2%, 24%, and 27% starting this year. Kim said, "Considering the shareholder-return stance that will be strengthened later, it is fully achievable."
For the lower bound of the index, 4,100 points was presented. This assumes the currently expected EPS forecast is revised down by 6% and the PER multiple falls to 10 times. Thanks to higher profits than in the past, Kim judges that even if the KOSPI shows a weak trend, it will at least move above 4,000 points.
The index trajectory is projected to rise in the first half and move sideways in the second half, as before. Based on this, an overweight allocation in the first half is recommended.
Kim said, "U.S. rate cuts that will appear in the first half and Korea's fiscal expansion policy will proceed as is, and this could have a positive impact on growth in sectors other than information technology (IT)," adding, "It is necessary to focus on sectors where profit momentum is maintained along with semiconductors."