Samsung Electronics Shows Strong Semiconductor Earnings Visibility... Stock Price Rebound Expected

[Asia Economy Reporter Song Hwajeong] Samsung Electronics is expected to see a stock price rebound this year due to the solid performance of its semiconductor division in the third quarter.

According to Hana Financial Investment on the 22nd, Samsung Electronics' operating profit for the third quarter is estimated at 15.7 trillion KRW. This is an upward revision from the previous 15.2 trillion KRW and exceeds the consensus estimate of 15.48 trillion KRW. Kim Kyungmin, a researcher at Hana Financial Investment, explained, "This is because the memory and non-memory semiconductor sectors are expected to outperform due to improved profitability," adding, "The operating profit estimates by business division are 9.59 trillion KRW for semiconductors, 1.45 trillion KRW for displays, 930 billion KRW for consumer electronics, 3.51 trillion KRW for IM (IT & Mobile), and 210 billion KRW for Harman."

Since the outbreak of COVID-19, Samsung Electronics has posted an average quarterly operating profit exceeding 10 trillion KRW over the last four quarters. Considering that initial operating costs for semiconductor production lines negatively impacted profitability, this is a solid performance. The business divisions significantly influencing the third quarter operating profit are IM and semiconductors. Researcher Kim stated, "For IM, the early third-quarter operating profit estimate is maintained as is," explaining, "because positive and negative factors offset each other." The positive factor is the weaker won-dollar exchange rate, which improves results when converted to KRW. The negative factor is sluggish smartphone shipments due to East Asian shutdowns and parts shortages. Smartphone shipments for the third quarter are expected to be around 70 million units. For semiconductors, profitability improvement due to cost reduction is highly anticipated. Kim said, "This is due to improved yields in advanced non-memory foundry processes and cost reductions in 15-nanometer DRAM and 128-layer NAND flash," adding, "accordingly, the early third-quarter estimate of 9.13 trillion KRW has been revised upward to 9.59 trillion KRW."

There is a positive view that the visibility of third-quarter results stems from the semiconductor sector. Researcher Kim said, "The semiconductor division's performance is the most important, and with good visibility in the semiconductor division's results, a stock price rebound is expected," and maintained a "Buy" investment rating with a target price of 101,000 KRW.

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