20170727-三星证券-2Q_earnings_to_lift_market,_politics_notwithstanding_41页_2mb

Samsung Model Portfolio Summary

Core Content

This document provides an analysis of the performance and strategic adjustments of the Samsung Model Portfolio for the period from June 27 to July 26, 2017. It outlines the portfolio's performance relative to the Kospi index, discusses the market outlook for August, and details changes in sector exposure and specific stock additions/removals.

Main Points

• Performance Review (June 27 - July 26, 2017):

  • The Samsung Model Portfolio gained 4.75%, outperforming the Kospi by 2.97% over the one-month period.
  • Over three months, the portfolio gained 15.65%, surpassing the Kospi's 10.82% by 4.84%.
  • Over six months, the portfolio gained 22.59%, outperforming the Kospi's 17.85% by 4.74%.
  • Over twelve months, the portfolio gained 26.97%, surpassing the Kospi's 20.75% by 6.22%.

• August Outlook:

  • The US economy is expected to lack additional growth momentum and inflationary pressure, leading to concerns about the delay of the Trump agenda.
  • The Fed is anticipated to begin quantitative tightening (QT) in September, which may impact financial markets as early as August.
  • Although QT is expected to proceed gradually, the market may experience fluctuations.
  • The Korean market is expected to benefit from improved earnings, with the MSCI Korea forward EPS forecasts rising by 11.0% over the past three months.
  • The IT sector is expected to continue driving the Kospi higher, while the steel, chemicals, and securities sectors remain undervalued.
  • The authors remain optimistic about the Korean market but recommend focusing on sectors where earnings improvements have not yet been reflected in the market.

• Portfolio Adjustments:

  • The portfolio's beta is reduced to 1.01 from 1.07 in July, indicating a more defensive stance.
  • Exposure is increased in the industrials, consumer staples, healthcare, and telecom services sectors.
  • Exposure is decreased in the materials, consumer discretionary, and IT sectors.
  • Specific stocks are added, including Hanon Systems, KT&G, LG Display, Hyundai Mipo Dockyard, S1, S&T Motiv, LIG Nex1, Hyundai Green Food, and Huons.
  • Specific stocks are removed, including Hyundai Motor, Hyundai Heavy Industries, Hyundai CE, Hansae, TES, and Seoul Semiconductor.

Key Portfolio Changes

• Added Companies:

  • Hanon Systems
  • KT&G
  • LG Display
  • Hyundai Mipo Dockyard
  • S1
  • S&T Motiv
  • LIG Nex1
  • Hyundai Green Food
  • Huons

• Removed Companies:

  • Hyundai Motor
  • Hyundai Heavy Industries
  • Hyundai CE
  • Hansae
  • TES
  • Seoul Semiconductor

• Sector Exposure Changes:

  • Industrials: Increased from 12% to 13%
  • Consumer staples: Increased from 4% to 7%
  • Healthcare: Increased from 3% to 4%
  • Telecom services: Increased from 2% to 3%
  • Materials: Decreased from 13% to 9%
  • Consumer discretionary: Decreased from 15% to 14%
  • IT: Decreased from 31% to 30%

Portfolio Weightings and Performance

• The portfolio weightings are compared to the Kospi index, with adjustments made to reflect changes in valuation and performance.
• Hanon Systems: Added with a weighting of 3%, showing a -7.5% performance vs. Kospi over one month.
• KT&G: Added with a weighting of 3%, showing a -2.5% performance vs. Kospi over one month.
• LG Display: Added with a weighting of 3%, showing a 12.4% performance vs. Kospi over one month.
• Hyundai Mipo Dockyard: Added with a weighting of 2%, showing a 3.4% performance vs. Kospi over one month.
• LIG Nex1: Added with a weighting of 2%, showing a 5.0% performance vs. Kospi over one month.
• S1: Added with a weighting of 2%, showing a -3.7% performance vs. Kospi over one month.
• S&T Motiv: Added with a weighting of 2%, showing a 6.6% performance vs. Kospi over one month.
• Hyundai Green Food: Added with a weighting of 2%, showing a 2.3% performance vs. Kospi over one month.
• Huons: Added with a weighting of 2%, showing a 13.4% performance vs. Kospi over one month.

Sector Performance and Valuation

• IT sector: Expected to continue driving the Kospi higher, but has a reduced weighting in the portfolio.
• Steel, chemicals, and securities sectors: Remain undervalued relative to 10-year averages.
• Consumer discretionary: Slightly overweighted, with a weighting of 14%.
• Financials: Overweighted with a weighting of 15%, showing a 3% increase compared to the Kospi.
• Healthcare: Overweighted with a weighting of 4%, showing a 1% increase compared to the Kospi.
• Industrials: Overweighted with a weighting of 13%, showing a 1% increase compared to the Kospi.
• Consumer staples: Overweighted with a weighting of 7%, showing a 0% change compared to the Kospi.

Conclusion

The Samsung Model Portfolio is positioned to benefit from the improving earnings of Korean firms, while maintaining a low-beta strategy to mitigate the potential impact of global policy uncertainties. The portfolio is expected to continue its upward trend, with a focus on sectors that offer value and growth potential, and adjustments made to reflect the current market dynamics and valuation trends.