Kospi’s P/E ratio has been halved compared to a year ago and compared to its global peers

[Photo by Yonhap]

Kospi’s price-to-earnings ratio (P/E) nearly halved year-on-year to well below its global peers in both developed and emerging markets, despite stronger earnings to reflect the magnitude of the discount for Korean equities.

According to a benchmarking report from the Korea Stock Exchange, the country’s sole exchange operator, on Tuesday, Kospi posted a P/E ratio of 11.1x based on 2021 annual returns, more than halving from 26x. from last year.

The P/E ratio, comparing a company’s stock price to its earnings per share, is used to show whether it is overvalued or undervalued. A lower P/E ratio suggests the stock is undervalued and vice versa. Kospi’s P/E ratio indicates the overall performance of Korean companies listed on the main stock exchange.

Kospi companies’ net profit jumped 127.8% to 182 trillion won ($144 billion) last year, from 80 trillion won in 2020. But over the same period, market capitalization has fallen. is contracted by 2.7% to 2,084 trillion, driving down the P/E ratio.

Its price-to-book ratio (P/B ratio), which compares a company’s market value to its book value, or more specifically the company’s stock price to its book value per common share, fell to 1.1x against 1.3x over the same period. .

Share prices fell even as Kospi’s total equity rose to 1.885 trillion won at the end of 2021 from 1.651 trillion won a year earlier.

Like the P/E ratio, a lower P/B ratio means a stock is undervalued.

The Kospi’s P/E ratio and P/B ratio are quite low compared to its global peers.

Based on the Kospi 200, comprised of the 200 largest publicly traded publicly traded stocks, the P/E ratio came in at 9.8x, about half compared to developed markets’ 18.4x and also lower than 12.3x from emerging markets. The same was true for the P/E ratio with the Kospi 200 registering 1.0x, compared to 2.8x for developed markets and 1.6x for emerging markets.

The Kospi 200’s dividend yield, which shows a stock’s annual dividend payments relative to its price, was 2.0%, on par with developed markets but below 2.7% in emerging markets.

Comparing the P/E ratio of Kospi’s top 50 companies by market capitalization, Samsung Biologics ranked first with 142.5x, followed by Ecopro BM with 105.0x and LG Energy Solution with 103.1x . The bottom group included HMM with 2.1x, POSCO Holdings with 3.4x and Industrial Bank of Korea with 3.9x.

When it comes to P/E ratio, Ecopro BM leads the chart with 20.3x, followed by Samsung Biologics with 11.2x and LG Energy Solution with 10.3x, while Korea Electric Power Corp came in at the bottom with 0.2x, accompanied by Samsung Life Insurance with 0.3x and Industrial Bank of Korea with 0.3x.

Healthcare and utilities stocks were relatively overvalued with a P/E ratio of 54.8x and 36.3x, respectively. But securities recorded 3.4x, banks 5.0x and steel 5.1x.

Combined annual dividend payouts from Kospi-listed companies fell to 37.5 trillion won last year from 38.2 trillion won a year earlier, but the dividend yield remained unchanged at 1.8%.

But without leader Samsung Electronics, Kospi’s dividend payouts amounted to 28.9 trillion won in 2021, jumping 41.9% from 20.3 trillion won in 2020, when total payouts jumped. with the tech giant’s special dividend of 10.7 trillion won.

The most profitable stocks on the Kospi were SK Telecom with a dividend yield of 11.7%, accompanied by the Industrial Bank of Korea with 6.9%, Hana Financial Group with 6.7%, Woori Finacial Group with 6, 0% and Samsung Fire & Marine Insurance with 5.8%. .

Financial stocks posted a relatively high dividend yield, with securities companies recording 6.4%, banks 5.1% and insurance companies 3.4%. But healthcare stocks showed a dividend yield of just 0.3% and media/entertainment stocks 0.5%.

By impulse

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Sallie R. Loera