[Click eStock] "Samsung Electronics, Uncertainty Expected to Ease"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment maintained a 'Buy' rating and a target price of 100,000 KRW for Samsung Electronics on the 27th, anticipating a reduction in uncertainty.

Samsung Electronics' third-quarter earnings this year are expected to exceed market consensus. Shinhan Financial Investment projected Samsung Electronics' Q3 revenue to increase by 13% quarter-on-quarter to 71.9 trillion KRW, and operating profit to rise by 27.5% to 16 trillion KRW. Choi Doyeon, a researcher at Shinhan Financial Investment, explained, "Samsung Electronics' Q3 operating profit will slightly surpass the consensus (15.7 trillion KRW), driven by rising DRAM and NAND prices, recovery in smartphone shipments, increased OLED utilization rates, and favorable exchange rate effects."

There is a limited possibility of further expansion of uncertainty. While concerns about the memory market peak dominate the stock market after Q3, uncertainties remain for Q4 this year and Q1 next year due to IT supply chain disruptions. Researcher Choi stated, "We expect price change rates for DRAM and NAND to be -4%, -2% in Q4 this year, and -5%, -4% in Q1 next year," adding, "The risk of a trend decline in the memory market exists if the supply chain disruption period overshadows the genuine increase in IT demand, but the memory market is expected to recover from Q2 next year." He also noted, "We are paying attention to the recent slowdown in COVID-19 spread in Vietnam and Malaysia, as well as the deceleration in the decline of DRAM spot prices," and added, "Next year's earnings are expected to improve with revenue increasing by 9% year-on-year to 299.5 trillion KRW and operating profit rising by 16% to 61.6 trillion KRW."

Demand for foldable phones launched this year has significantly exceeded expectations. Considering the speed of parts procurement, the short-term impact on earnings is not large, but it is a positive factor for the stock price. Researcher Choi analyzed, "The growth story that initially captured the smartphone market with OLED adoption is highly likely to be reproduced," and "The synergy between sets (smartphones) and components (display, semiconductors) is expected, and recent price increases due to non-memory supply shortages are also positive."

With uncertainty easing and positive conditions in mind, a stock price rebound is anticipated. Researcher Choi said, "A short-term stock price rebound compensating for excessive declines is expected, followed by a rally during the phase of expanding forward orders," and added, "Momentum is likely to operate in Q4, when IT supply chain disruptions ease and forward inventories are largely absorbed."

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