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Buy: GKL
Daewoo Securities says that the stock price of Grand Korea Leisure (GKL), which operates foreigner-exclusive casino Seven Luck Casino, is still too low. The firm is a subsidiary of the Korea Tourism Organization, which owns 51 percent its shares.
Sales and operating profits for the first quarter are expected to have increased 13 percent and 28.2 percent, respectively, from last quarter, according to Daewoo’s report.
The increase in Chinese tourists to Korea will give a big boost to GKL’s profit. In 2010, the number of Chinese tourists jumped 40 percent from the previous year and over 20 percent of GKL’s customers are Chinese. Daewoo also believes that the earthquake in Japan will bring more Chinese gamblers to Korea this year.
Buy: Kumho Petrochemical
Kumho Petrochemical is expected to have gained global market share in the first quarter as the earthquake and tsunami damaged facilities of Japanese petrochemical firms, says Woori Investment & Securities.
Unfavorable climate conditions are choking the supply of natural rubber, which pushes up the demand for synthetic rubber. Kumho is a major producer of synthetic rubber.
In another report, Samsung Securities says that the increasing demand for tires in emerging markets will help Kumho raise its sales. Kumho has the world’s largest production capacity for synthetic rubber.
Sell: SK Innovation
Hyundai Securities removed SK Innovation, Korea’s biggest energy company, from its recommendation list last Friday. The brokerage house said that it has already made a return of 11.5 percent from January and now is the time to cash out.
SK Innovation’s stock price has been benefitting from the earthquake in Japan, where its rivals saw their refineries damaged by the disaster. Many other stock brokers still recommend the stock.
Ocean Asset, an investment advisory, agrees with Hyundai that there is a risk of sudden change of investment sentiment in April when the company releases its earnings report for the first quarter.
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