'Samsung Electronics of Love and Hate' Sold by Individuals, Reacquired by Foreigners... Diverging Perspectives

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] The market investors' sentiment toward Samsung Electronics, South Korea's leading stock by market capitalization, has been divided. Foreign investors, who sold off shares throughout May, have started buying again in June. They managed to create the '70,000 won electronics' level and have restored it back to '80,000 won electronics.' On the other hand, individual investors seem to have changed their minds. Amid a prolonged sideways market, negative investment opinions from experts have led them to start selling.

According to the Korea Exchange on the 9th, individual investors sold a total of 761.7 billion won worth of Samsung Electronics shares over six trading days from June 1 to June 8. Samsung Electronics had held the top spot for net buying by individuals every month from January last year until last month, but in June it became the top net selling stock. This represents a sudden and significant shift in their position. As the stock price remained stuck in a box range and showed sluggish performance, fluctuating between 70,000 won and 80,000 won levels, this change appears to have occurred.

The factor shaking Samsung Electronics' stock price was foreign investors. Foreigners consistently sold for 15 out of 19 trading days in May, except for just four days. However, the situation changed in June. Foreign investors bought 439.6 billion won worth of Samsung Electronics shares in June and currently rank first in net buying. This is also a sudden change. Last month, Samsung Electronics was the top net selling stock for foreign investors. The net selling amount by foreigners in May alone reached 4.1085 trillion won.

Market outlooks for Samsung Electronics are divided, so such changes are expected to continue. Some view Samsung Electronics' stock price positively, anticipating a 'super cycle' in the semiconductor industry, while others hold a negative view, expecting a loss of momentum due to an 'oversupply' situation. Accordingly, target prices for Samsung Electronics vary widely, ranging from a low of 90,000 won to a high of 115,000 won, a difference of up to 25,000 won. The consensus target price is 103,136 won, which is a downward revision of 2,864 won (2.70%) from 106,000 won one month ago.

Nomura Securities is among those optimistic about Samsung Electronics' stock price. Nomura recently forecasted that the semiconductor sector's DRAM hit its bottom in Q4 last year, NAND in Q1 this year, and expects the super cycle to continue through 2023, setting Samsung Electronics' target price at 110,000 won.

Korea Investment & Securities also set a target price of 115,000 won, based on expectations that DRAM prices will rise more than 10% in Q3 and that supply and demand for non-memory semiconductors will gradually improve from late Q3 to early Q4. Shinhan Financial Investment, with a target price of 105,000 won, expects improved second-half performance due to price increases driven by the memory semiconductor upcycle.

Conversely, those taking a conservative approach worry about DRAM oversupply next year. NH Investment & Securities lowered its target price from 110,000 won to 95,000 won, citing concerns over supply-demand burdens caused by oversupply. Hana Financial Investment also cut its target from 111,000 won to 101,000 won. Kim Kyung-min, a researcher at Hana Financial Investment, explained, "Among price (P), quantity (Q), and cost (C) factors for semiconductor suppliers, the non-memory semiconductor sector (automotive semiconductors, SSD controllers, driver ICs) continues to experience a shortage in quantity (Q). Suppliers in the mid-to-low-end semiconductor market prioritize operating rates over capacity expansion, which may limit product shipments in Samsung Electronics' set business (IM, TV)."

Nam Dae-jong, a researcher at Ebest Investment & Securities, cited factors limiting stock price gains, including concerns over rising costs in the set business division, worsening competitive environment, and worries about oversupply in 2022 due to increased capital expenditures (Capex), recommending a target price of 95,000 won.

Kang Bang-cheon, chairman of Asset Plus Asset Management, who influences individual investors, also expressed the view that due to the semiconductor industry's characteristics?large reinvestment costs and the industry's restructuring leading to an era of multi-product, small-volume production?Samsung Electronics' growth, which handles a small number of product types, may be constrained.

This content was produced with the assistance of AI translation services.