Korea 2Q12 net profit to sink 17% lower than expected

Telecom, industrial and basic material sectors are foreseen to perform badly in 2Q12, Nomura said.

According to Nomura, 2Q12 net profit is expected to come in 7% below consensus, which has been lowered by 4% in the past one month. Excluding the Big Three (SEC, HMC and KIA), we believe net profits will likely come in 17% lower than the market’s expectation. Moreover, we expect 49% of the companies under our coverage to miss consensus estimates by more than 5%, and 33% to miss by more than 10%.

Here's more from Nomura:

Telecom, industrial, and basic material sectors to disappoint the most For 2Q12F, we expect the Electronics / IT (39% y-y) and Automobile (14% y-y) sectors to report high growth despite slowing global demand. We also expect these sectors to report above-consensus 2Q12F earnings.

On the other hand, we expect the Telecom sector to report the highest % y-y decrease in NP in 2Q12F and to disappoint the market, as election-year policies will likely continue to squeeze the profits of telcos, in our view. Overall, we are cautious on both the industrial (machinery, construction, shipbuilding) and basic material sectors on slowing global macro conditions.