Strong earnings have not been enough to add appeal to Korean trading stocks whose prices remained underperformed due to cold response from foreign investors.

According to industry sources on Monday, Korea’s top four trading companies - Posco Daewoo Corp., SK Networks Co., LG International Corp. and Samsung C&T Corp. - saw their combined operating profit in the third quarter surge 85.9 percent on year to 261.8 billion won ($235.5 million).

The trading division of Samsung C&T showed the highest on-year profit growth in the third quarter, soaring 253.8 percent to 46 billion won. LG International’s operating profit also jumped 200.9 percent to 65 billion won while Posco Daewoo grew 47.6 percent to 98 billion won and SK Networks 32.7 percent to 52.8 billion won.

But their impressive performance did not help their stock prices much. Posco Daewoo’s share is currently trading at a price that is 28.1 percent lower than the beginning of the year. LG International’s share is also down 16 percent since February. Shares of SK Networks and Samsung C&T have been boxed to around 6,500 won and 140,000 won, respectively, over the past year.

According to Daeshin Securities Co., foreign investors have net sold 91.5 billion won worth of Posco Daewoo shares and 47.3 billion won of SK Networks shares from Jan. 1 to Nov. 3. During the same period, they have net bought 21.9 billion won of LG International shares and 284.2 billion won of Samsung C&T shares.

Weighed down by foreign selling, the firms’ stocks are mostly undervalued. The price-to-book ratio (PBR) of SK Networks stands at 0.66, LG International at 0.91 and Posco Daewoo at 0.90. Only Samsung C&T’s PBR is above 1 at 1.31. The PBR compares the stock’s market value against its book value, with a PBR below 1 meaning that a stock is undervalued.

Their underperformance is in stark contrast to the unprecedented rally in the main Kospi market driven by the recent semiconductor boom.

Market analysts are upbeat about their outlook.

Posco Daewoo is projected to record 315.4 billion won in operating profit from its offshore gas fields this year, up 28.8 percent from the last year, according to Huh Min-ho, an analyst at Shinhan Investment Corp. He also forecast LG International to benefit from the 35 percent on-year rise in coal prices in the fourth quarter and expected revenue would grow 10 percent in the logistics business.

As of 10:11 a.m. Tuesday, shares of Posco Daewoo rose 2.02 percent to 20,200 won and LG International 0.51 percent to 29,750 won. Samsung C&T shares were up 0.34 percent at 145,500 won. SK Networks shares remained unchanged at 6,480 won.

By Yoon Jin-ho and Kim Hyo-jin

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