Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
JPMorgan's 'unreliable' outlook on Korean companies
Celltrion Chairman Seo Jung-jin shares his company's roadmap for growth during a JPMorgan healthcare conference in San Francisco on Jan. 15. / Yonhap
By Lee Min-hyung
By Lee Min-hyung
JPMorgan's seemingly “unreliable and radical” forecast on Korean companies is raising eyebrows from investors after it turned out that most local stocks that the U.S. investment bank predicted to fall this year reported whopping growth.
Late last year, JPMorgan urged investors to sell shares of Netmarble, one of the biggest game firms here, setting its target stock price at 60,000 won ($54.95) in 2020.
But the company closed at 128,500 won on Friday on the main bourse. Despite the pessimistic growth forecast by JPMorgan, Netmarble shares jumped to as high as 200,000 won in September.
The negative outlook was in contrast to what most Korean brokerage houses had been saying. Earlier this year, eBest Investment & Securities expected Netmarble shares to rise to 115,000 won on hopes of the firm's launch of new game titles.
JPMorgan also set Hanssem's 2020 target stock price at 51,000 won and maintained a negative growth outlook on the nation's largest furniture firm. Hanssem shares were traded at around the 60,000 won range as of December last year, but its valuation is on track for stable growth to possibly hit the 100,000 won mark in the foreseeable future. The company closed at 99,400 won on Friday, up 2,900 won from the previous trading day.
Also of note is more than half of stocks that the investment bank forecast to rise this year reported stronger-than-expected value.
JPMorgan's target stock price of LG Chem was 360,000 won this year, but the firm's valuation more than doubled from the earlier forecast to close at 808,000 won as of Friday.
The U.S. firm's growth forecast on Samsung Electronics, the largest Korean company by market capitalization, also has a margin of error of more than 20 percent. JPMorgan set Samsung's target price at 60,000 won, but it closed at 73,400 won on Friday by continuing a month-long rally on the benchmark KOSPI.
Other stocks ― such as Samsung SDI and Kakao ― also reported stronger growth than JPMorgan's earlier forecast.
For 2021, JPMorgan expressed an opinion of selling four Korean stocks: Celltrion, Celltrion Healthcare, Hanwha Life Insurance and Samsung Heavy Industries.
In September, Celltrion made headlines after JPMorgan drastically cut a target stock price of the biopharmaceutical company at 190,000 won. This was a drop of 40 percent, compared to the firm's then-stock price.
After JPMorgan released a report on the negative outlook of Celltrion, its stock price fell by 6 percent. But starting November, Celltrion shares have been on track for recovery. The company closed at 361,000 won on Friday, up 1,000 won.
JPMorgan forecast Celltrion shares to decline to around 210,000 won in 2021, which drew strong backlash from retail investors here.
But most Korean securities firms remain optimistic over Celltrion's additional rally next year.
Hanwha Investment & Securities revised up the firm's target stock price to 450,000 won. Other brokerage firms ― such as Heungkuk Securities ― also expected Celltrion shares to hit the 400,000 won mark next year amid hopes for development of an antiviral treatment against COVID-19.
“Celltrion's sales in 2021 are estimated to reach 2.21 trillion won, up 18 percent from a year ago,” Meritz Securities analyst Kim Ji-ha said. “This is because the company is expected to raise profitability due to increasing sales of COVID-19 test kits and biosimilar Remsima SC.”