First-quarter earnings at Korea's listed companies improved on both the main and secondary boards, but the quality of profits and financial strength diverged sharply between the two markets. KOSPI-listed firms saw operating profit nearly triple on the back of a semiconductor boom led by Samsung Electronics (005930.KS) and SK hynix (000660.KS), while KOSDAQ-listed firms posted strong net profit growth but had more than 40% of their members in the red and a higher debt ratio, exposing a gap between top-line growth and underlying strength.
According to the Korea Exchange (KRX) on Tuesday, the 639 December-fiscal-year companies on the main KOSPI market posted consolidated first-quarter revenue of 927.5409 trillion won, up 19.49% from a year earlier. Operating profit climbed 175.83% to 156.3194 trillion won, and net profit rose 177.82% to 141.4436 trillion won. Profit growth far outpaced revenue growth. The operating margin improved by 9.55 percentage points to 16.85% from 7.30%.
Large-cap chipmakers were at the center of the earnings improvement. Samsung Electronics and SK hynix posted combined consolidated first-quarter revenue of 186.45 trillion won, accounting for 20.10% of the total. The two companies generated operating profit of 94.84 trillion won and net profit of 87.57 trillion won, meaning more than 60% of the entire market's operating profit came from the two firms.
Even excluding the two, however, KOSPI revenue rose 9.07% to 741.0912 trillion won. Operating profit increased 44.49% to 61.4764 trillion won, and net profit grew 55.79% to 53.8724 trillion won. The operating margin of companies excluding the chipmakers also rose to 8.30% from 6.26%. While semiconductors lifted both the index and the upper end of earnings, profit improvement spread to other sectors as well.
By sector, electrical and electronics stood out. On the KOSPI, the sector's consolidated revenue rose 81.38%, operating profit jumped 927.56%, and net profit climbed 457.07%. IT services revenue increased 41.41%, while the metals sector posted a 58.92% gain in operating profit. The financial sector also saw consolidated operating profit rise 30.51% and net profit rise 28.82%, led by the securities industry, where operating profit and net profit surged 141.19% and 139.33%, respectively.
The KOSDAQ market also posted strong profit growth. The 1,273 December-fiscal-year companies on the KOSDAQ recorded consolidated first-quarter revenue of 84.9461 trillion won, up 21.72% from a year earlier. Operating profit rose 78.17% to 4.1284 trillion won, and net profit jumped 171.22% to 4.4342 trillion won. The operating margin improved to 4.86% from 3.32%. The absolute size of profits and profitability, however, lagged the KOSPI by a wide margin.
Within the KOSDAQ, the gap between blue-chip firms and the rest was wide. The 131 companies in the KOSDAQ150 index posted consolidated revenue of 25.2467 trillion won, up 44.79%. Operating profit rose 53.23% to 1.9223 trillion won, and net profit grew 64.77% to 1.7587 trillion won. The operating margin of KOSDAQ150 companies stood at 7.61%, more than double the 3.70% recorded by non-index firms. Companies in the KOSDAQ Global Segment also posted an operating margin of 9.96%, 5.65 percentage points higher than non-segment firms.
The issue is the market's underlying strength. Only 752 KOSDAQ companies, or 59.07% of the total, posted a consolidated profit, while 521, or 40.93%, were in the red. The debt ratio rose 9.23 percentage points to 122.03% at the end of the first quarter from 112.80% at the end of last year. By contrast, 504 KOSPI companies, or 78.87%, were profitable, while 135, or 21.13%, posted losses.
"The KOSPI has seen its profit base step up a level, driven by semiconductors, while the KOSDAQ, except for some blue-chip stocks, still has a large number of loss-making firms and heavy financial burdens, showing a clear gap in earnings improvement," an official in the financial investment industry said.
