Stock picks: buy Lotte Chilsung, sell hyundai motor
Buy: Lotte Chilsung Beverage
Hanwha Securities says that Lotte Chilsung Beverage has increased its market share in the liquor business. Their market share in soju, the most-loved drink in Korea, is elevated from 14.1 percent last year to 15.8 percent so far this year.
The entire soju market itself is expanding this year, so this will boost Lotte’s portion even further, says Hanwha.
The operating profit has doubled in the first quarter from a year ago, thanks to a decrease in the marketing and administrative cost. In turn, Hanwha expects that Lotte’s earnings per share (EPS) will increase 150 percent this year.
Also, the balance-sheet loss from its subsidiaries is expected to be lowered this year _ last year the company booked 21.27 million dollars of loss in the value of its shareholdings in three subsidiaries in China. Recent improvements in the distribution network and storage facilities in the Chinese subsidiaries mean that the loss will be trimmed this year, says Hanwha.
Buy: Silicon Works
Silicon Works, producer of semiconductor and semiconductor equipments, is expected to see a profit increase this year due to brisk sales of Apple’s iPad 2 tablet PC, says Shinhan Investment.
Silicon Works supplies a part called Timing Controller (T-Con) for the production of iPad. The chip is used in controlling its display panel. In countries like England and Canada, the iPad 2 was sold out the day it was released.
Other products are selling well. The company is to release high-end T-Cons, which are designed for premium TVs over 40 inches in the second quarter. Shinhan says that this new release will add momentum to company’s stock price.
Daewoo Securities also has a positive outlook for Silicon Works. The brokerage house says that due to the earthquake in Japan, Japanese T-Con suppliers such as Renesas are having setbacks in production. If shortfalls in global T-Con supply continue, Silicon Works will benefit from it.
Sell: Hyundai Motor
Woori Investment & Securities took out Hyundai Motor, Korea’s biggest car manufacturing company, from their recommendation list last Friday. Woori explained that the share price seems to have peaked out, and investors are beginning to cash out, although the company’s fundamentals still look satisfactory.
A report on the motor industry, released by Daishin Securities on Friday, also supports Woori’s view. Daishin says that the purchase of Hyundai’s shares by foreigners amounted to 3.48 billion dollars within 33 months.
During the same period, foreigners also bought 6.87 billion dollars worth of Samsung Electronics stocks. Considering that Samsung’s market value is about three times that of Hyundai Motor, the recent foreign buying into Hyundai seems to be excessive, Daishin says.