Korea Investment & Securities Co. on the 4th raised its second-half KOSPI target to 11,000 points from the previous 9,250.
Korea Investment & Securities Co. said in a report that day it had revised the KOSPI band upward to 8,000–11,000 points.
Kim Dae-jun, an analyst at Korea Investment & Securities Co., said, "We revise the second-half KOSPI target to 11,000 points from the previous 9,250," adding, "The basis for the outlook adjustment is corporations' earnings."
The analysis is that semiconductors, riding a supercycle, are generating massive profits and supporting the index's rise.
Kim said, "We see 12-month operating profit for Samsung Electronics and SK hynix rising about 10% from the prior outlook," adding, "Accordingly, an additional 10% upward revision to earnings per share (EPS) can also be justified."
The second-half target price-earnings ratio (PER) was presented at 9.5 times, and the KOSPI payout ratio was set at 25%, 27% and 30% over the next three years.
Kim analyzed, "The current 12-month forward PER is 8.5 times, and there is room for further upside," adding, "Earnings improvement and multiple expansion will contribute to the index's rise."
It was explained that the lower end of the index was presented by assuming earnings momentum (upward driver) deteriorates and is revised down 10%, while the PER multiple stays at the current level. In that case, the KOSPI would likely form a bottom at 7,900 points.
However, considering index volatility and step lines, the lower bound that can be presented could be 8,000 points.
Kim said, "KOSPI 8,000 points is a high level compared with the past, but the current semiconductor-centered earnings growth is clear, so the scale of any index correction may not be large."
Korea Investment & Securities Co. expected the KOSPI to rise in the second to third quarters and move sideways in the fourth quarter.
Kim analyzed, "Semiconductors that can withstand high inflation and high interest rates are expected to lead the stock market," adding, "However, as the fourth quarter approaches, investor sentiment may weaken due to U.S. election uncertainty and supply-demand instability, and the existing leading sectors may also see slower momentum."