●Buy: Hyundai Heavy Industries

It’s a bargain chance to buy shares of Hyundai Heavy Industries, the world’s largest shipbuilder, says Korea Investment & Securities analyst Richard Park.

Hyundai reported disappointing second quarter results with sales of 6.05 trillion won and an operating profit of 677 billion won. Previously, local stock analysts had predicted an operating profit of 906 billion won, according to FNguide, a research firm. So the result was received as an earning shock, and Hyundai’s stock price ended at 417,500 won on Friday — down 23 percent from its peak in April.

But Korea’s Park says that it is no reason to get disappointed, adding that he was one of the few analyst who knew the second-quarter profit would be that low. The reason to be optimistic is that sales have increased over all its major business divisions — shipbuilding, engines, construction equipment and plants.

More good news for Hyundai shareholders is that the company has dropped the idea of buying Hynix, a semiconductor maker. Analysts had worried that Hynix would devour Hyundai’s cash reserves.


●Buy: Kia Motors

Kia’s shares rose 2.8 percent on Friday on the news that its union signed an agreement with management on a remuneration package, after seven rounds of negotiations.

Suh Sung-moon, an analyst at Korea Investment & Securities, put Kia’s target price at 105,000 won, compared to Friday’s closing price of 77,100 won. Kia is Korea’s second largest carmaker and is part of Hyundai Automotive Group.

An active union was a discount factor on Kia’s shares but this is no longer the case, Suh claims. This year’s union-management agreement was especially promising because it made a second consecutive year without a strike. Lasting 16 days, it was also the shortest annual negotiation in the history of the company and the first time since 2004 to sign before the summer vacation season starts. The workers and managers agreed to raise the base salary by 5.2 percent. They will receive a package of cash and stock bonuses as well.

Kia’s stock price has risen by more than 150 percent over the past 12 months, thanks to strong sales in the United States and other overseas markets. Currently about one third of its cars are made outside Korea.

●Sell: Seah Special Steel

Samsung Securities removed Seah from its buy recommendation list last Friday, saying that investors should have made enough profit by now. Debuting in the KOSPI market on June 3 at 32,200 won, the stock peaked at 53,400 won and then fell back to 49,000 won on Friday. Samsung included the firm on the buy list on July 11, which means there was 8-percent profit earned until last week if investors followed the advice at the time.

Established in 1986, Seah supplies basic materials to carmakers and machinery makers. It is the largest maker of steel bars and wires with enhanced physical and chemical characteristics. The sales of CHQ wire, its flagship product, have increased by 50 percent over the past three years.