[R&E] Okins Electronics Reports 118% Q1 Operating Profit 'Earnings Surprise' Driven by HBM... The Power of Semiconductor Testing Overcoming Interest Rate Pressures

[R&E: Research & Epoch] This is News Epoch's signature report that provides a perspective on a new era of investment by integrating and analyzing global financial data and domestic securities firm research.

Global Market Brief

In the New York stock market the previous day, the Dow Jones Industrial Average rose by 0.32%, but the S&P 500 and Nasdaq indices fell by 0.07% and 0.51%, respectively, closing slightly lower. In particular, the Philadelphia Semiconductor Index dropped by 2.47%, clearly showing a sense of caution across the semiconductor sector. This is the result of a combination of major tech companies' earnings announcements and sluggish real economic indicators for April in both the US and China.

China's industrial production in April increased by 4.1% year-on-year, but significantly fell short of the market expectation of 6.0%, and retail sales only increased by 0.2%, proving a delay in domestic demand recovery. Amidst upward pressure with the US 10-year Treasury yield recording 4.587%, there is a prevailing observation that the Federal Reserve's (Fed) forecast for interest rate cuts within the year could be revised from the previous two to one. The rising trend of interest rates in the global bond market, such as the Japanese 30-year government bond yield hitting a record high, places a significant burden on the monetary policies of central banks in each country.

Domestic Market Summary

On the previous trading day, the domestic stock market saw the KOSPI close slightly higher, rising 0.31% to 7,516.04pt, while the KOSDAQ fell 1.66% to 1,111.09pt, intensifying the divergence between large-cap and small-to-mid-cap stocks. The KRW/USD exchange rate closed at 1,493.3 won, down 4.4 won from the previous day, but maintains high volatility, repeatedly fluctuating around 1,500 won during intraday trading throughout the week.

The domestic 10-year government bond yield also rose slightly from the previous day to 4.233%, aligning with the global trend of interest rate hikes. Even amidst such financial market uncertainty, some companies in the domestic semiconductor testing and bio sectors demonstrated their potential to secure growth momentum by announcing robust earnings.

Key Industry Issues and Insights

Semiconductor Testing: Securing High Profitability Riding on HBM Demand

Okins Electronics (KOSDAQ: 080580) recorded consolidated sales of 25.6 billion won in the first quarter of 2026, a 35.7% increase year-on-year. During the same period, operating profit surged by 118.6% to 3.6 billion won, and the operating profit margin (OPM) reached 14.1%, significantly improving profitability. This is analyzed to be the result of robust demand growth for test sockets and probe pins, along with improvements in the high-margin product mix acting as key drivers.

In particular, the fact that the sales proportion of HBM (High Bandwidth Memory)-related pogo pins and magnetic collets expanded from the 10-15% level last year to about 20% in the first quarter proves the direct benefit of the AI semiconductor market's growth. The improvement in chip test parallel processing capacity by about 20 times compared to before through the introduction of new CLT equipment is a factor in securing a competitive advantage by effectively responding to the rapidly increasing demand for high-performance semiconductor testing.

Pharmaceutical/Bio: Product Competitiveness and Overseas Market Expansion are Key

Boryung (KOSPI: 003850) recorded sales of 255.4 billion won in the first quarter of 2026, growing by 6.2% year-on-year, and operating profit surged by 84.7% to record 20.2 billion won. It is evaluated that the growth of the hypertension/dyslipidemia business division and the even increase in sales of major products such as Dukarb, Alimta, and Gemzar drove the profitability improvement.

On the other hand, Daewon Pharmaceutical (KOSPI: 003220) had first-quarter sales of 158.1 billion won, similar to the previous year, but operating profit decreased by 53.4% to 4.38 billion won, falling below market expectations. An increase in selling, general, and administrative (SG&A) expenses is the main cause of the profitability deterioration.

Meanwhile, Biosolution (KOSDAQ: 086820)'s osteoarthritis treatment 'Cartilife' obtained sales approval in Hainan, China, and is preparing for its official launch in the second half of the year. Considering the drug price of around 42 million won and the target patient market of 200,000 in China (out of an estimated total of 100 million), this is expected to be an important turning point to offset sluggish domestic sales and secure new growth momentum.

Finance: Expectations of Expanded Shareholder Returns Amidst Interest Rate Hike Pressure

Domestic large bank holding companies showed stock price increases of 31.2% in 2024 and 59.3% in 2025, securing an undervaluation appeal with an average PBR below 0.3 times. An increase in the possibility of a benchmark interest rate hike within the year acts as a factor to raise banks' net interest margin (NIM) by an average of about 2.5 basis points over one year. This is expected to contribute to improving the profitability of major financial holding companies such as KB Financial Group (KOSPI: 105560), Shinhan Financial Group (KOSPI: 055550), and Hana Financial Group (KOSPI: 086790).

In addition, due to impacts such as the reorganization of the risk-weighted assets (RWA) calculation method during the second quarter, the Common Equity Tier 1 (CET1) ratio is expected to rise by approximately 20 to 25 basis points. Such improvement in financial soundness serves as a solid foundation for expanding shareholder return policies, allowing KB Financial Group and Shinhan Financial Group to exceed a total shareholder return rate of 50% and Hana Financial Group to achieve 47% in 2025.

Transportation: The Contrasting Fortunes of Shipping Strength and Aviation Sluggishness

The investment opinion for the overall transportation sector has been upgraded to overweight. Global shipping rates broke through the 2,000 mark, showing a continued trend of strong maritime freight rates. In particular, Pan Ocean (KOSPI: 028670) saw its target stock price upgraded to 9,000 won, a figure that reflects a target P/B of 0.8 times. With uncertainties surrounding passage through the Strait of Hormuz persisting due to prolonged Middle East risks, it is analyzed that upward pressure on maritime cargo volume costs will continue.

On the other hand, the aviation industry is struggling due to the persistence of high oil prices and the burden of international fuel surcharges. Aviation fuel prices have surged to double the level prior to the war, making a second-quarter deficit inevitable for Korean Air (KOSPI: 003490). Global geopolitical risks are casting contrasting fortunes within the transportation industry.

Materials/Components: Infrastructure Investment and Upward Pressure on Raw Material Prices

Gaon Cable emerged as a major player in the core infrastructure supply chain by signing a 5-year, 4 trillion won long-term contract for data center power distribution facilities with a US Big Tech company. This is an example showing that AI and data center expansion is strongly driving demand for power infrastructure.

In the raw materials market, aluminum prices surged by 40% year-on-year, reaching the highest level in four years, and Chinese lithium prices also rose by 23% compared to the previous month. Such raw material price increases are interpreted as structural changes that appear as global economic recovery and infrastructure investment expansion intertwine.

Market Signals

• Bank Loan Increase: The total loan balance of deposit money banks in April increased by 12.8 trillion won from the previous month.

• Okins Electronics' Profitability: Operating profit in the first quarter of 2026 surged by 118.6% year-on-year.

• Sluggish Chinese Industrial Production: China's industrial production in April increased by 4.1% year-on-year, but significantly fell short of the estimated 6.0%.

• Global Freight Rate Increase: Global shipping rates broke through the 2,000 mark.

• USD-KRW Exchange Rate: Closed at 1,493.3 won the previous day, maintaining high volatility.

Epoch View: Investment Implications

While the global interest rate hike trend and geopolitical risks add uncertainty across the market, the domestic stock market delivers differentiated performance in sectors possessing core growth engines. The high growth of semiconductor testing equipment companies driven by the increase in HBM-related demand, and the robustness of bank stocks pushing for expanded shareholder returns, suggest structural changes in individual companies and industries that transcend the macroeconomic environment. Such market choices prove that strategic investments for the future and the strengthening of core competitiveness, rather than past growth methods, are essential requirements for improving profitability.

This content was written using News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic securities firm research centers and global financial media in real time. It is an objective summary based on collected data and does not constitute an investment solicitation or recommendation for specific stocks.