From the category archives:

Korea

Korea: Slow Down of Leading Index Might Be Temporary

3 March 2010

Jan YoY Industrial production rose to 36.9%; Main export sectors again boosted industrial production; Service production and consumer goods sales continued to grow in YoY basis; YoY construction orders also increased by strong rebound in private sectors; We forecast composite leading index rebound soon

Korean Banks: Revisiting the Most Feasible M&A Scenarios

3 March 2010

We have been positive on the Korean banks for three reasons: 1) Key earnings drivers (NIM and credit cost) on a favorable cycle and more upside risk than downside in FY10E earnings, 2) potential market consolidation, and 3) attractive valuations (0.9x 2010E P/BV) standing at the low end of their mid-cycle valuation range (0.9x~1.1x). In particular, M&A looks to be a key catalyst among the three.

Korean Auto Manufacturers: First Read on Feb-10 Auto Sales

2 March 2010

HMC: Global shipment came in at 251K units in Feb-10 (+23% Y-Y and -8% M-M); KIA: KIA reported global shipment at 138K units in Feb-10 (+46% Y-Y and -15% M-M); We reiterate our bullish calls on HMC (1M, TP: W160,000) and KIA (1M, TP: W28,000), while we prefer OEMs to parts manufacturers on greater leverage to auto demand.

Korea: Feb Trade Balance Turns into a Surplus and CPI Inflation Slows

2 March 2010

Though there were concerns of a possible trade deficit in February for a second consecutive month, the trade account instead turned into a surplus of USD2.3bn, from a deficit of USD0.5bn in Jan. Significantly stronger exports (to USD33.3bn from USD31.0bn) and moderating imports (to USD30.9bn from USD31.5bn) resulted from big gains in MoM shipbuilding exports (to USD4.9bn from USD1.9bn) and decrease in MoM crude oil imports (to USD5.1bn from USD5.8bn). Both exports and imports in February recorded double-digit YoY growth, but growth of imports (36.9%) outpaced exports (31.0%).

Korean Consumers: Robust Upswing in Discretionary Spending

21 February 2010

While the macro outlook and stock market offer conflicting signals, we take a bullish stance on discretionary spending; Discretionary spending growth appears to be in line with our nominal consumption growth forecast of 6% in 1H but exceed 4.4% in 2H with a deflator of 1.3% and 2.5%.

Korean Banks: 2009 Wrap-Up and 2010 Outlook

20 February 2010

Major Points: 4Q09 mixed with solid core earnings but shrinking bottom-lines; FY10E NIM to rise 27bps YoY, if 4Q09 level maintained; More upside surprise in FY10E credit costs; Standing at the low-end of historical valuation range of 0.9x ~ 1.1x P/BV

Korea: KRW May Not Be As Strong As Originally Expected

18 February 2010

Major Points: Recent volatility in USD/KRW reveals vulnerability of KRW to external shocks; Strengthening FX market environment has limitations on stabilizing market; Remaining sensitivity of risk aversion leads to a weaker KRW; Economic recovery/delay of BOK policy rate hikes also causes a weaker KRW; We now forecast annual average USD/KRW to rise 1,100 (previous 1,074)

Korean Auto Manufacturers: Stepping on the Gas Pedal

16 February 2010

We continue to argue that Korean auto OEMs are poised to increase further presence in the US, in tandem with 1) the replacement cycle of volume models, 2) enhancing residual value and 3) noise from Japanese OEMs. Looking at a combined US retail market share of 7.7% in 10E vs. 7.0% last year, however, we see upside risk to our estimates. We reiterate bullish calls on both HMC (1M, TP: W160K) and KIA (1M), while lifting TP on KIA to W28,000 on upward earnings revision ground.

Korea: Prolonged Exporter Rally

13 February 2010

Although the KOSPI has fallen 5% YTD, consensus earnings estimates have been revised up by 6% over the last three months, driven by Utility (+75%), Auto (+9%), Bank (+9%), and Tech (+7%). Earnings estimates were revised down for Refinery (-10%), Insurance (-9%) and Shipping (-9%).

Korea: We Now Expect Initial Policy Rate Hike in 2H

11 February 2010

BOK left policy rate at 2.0% for a 12th consecutive months as widely expected; Uncertainties surrounding global economy were behind the rate freeze; More upside risks to inflationary pressure in 2H confirm no rate hike in 1H; We now forecast BOK to raise the policy rate by 100bps in 2H 2010

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