[Click eStock] Samsung Electronics, Stock Price Movement Contrary to Earnings Performance

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities announced on the 30th that it maintains its top pick status within the semiconductor sector for Samsung Electronics, along with a buy rating and a target price of 100,000 KRW.

Recently, concerns over production disruptions in set manufacturing due to China's power shortages and Micron's conservative guidance have led to a renewed correction in memory companies' stock prices. However, the downside cycle concerns are already largely reflected in the current stock price, and the memory downturn cycle is likely to be short. Major production plants in Malaysia and Vietnam have also begun resuming operations, and set shipments are expected to gradually improve, which is likely to lead to inventory reductions among upstream companies and improved investment sentiment.

The estimated Q3 earnings are projected at 76 trillion KRW in revenue and 16.4 trillion KRW in operating profit, slightly exceeding the consensus operating profit of 15.8 trillion KRW. Estimated operating profits by business division are 10.1 trillion KRW for semiconductors (memory 9.5 trillion KRW, non-memory 600 billion KRW), 1.5 trillion KRW for displays, 3.8 trillion KRW for IM, and 1 trillion KRW for CE (including Harman). Performance improvement centered on the components division is expected due to the effect of the rising KRW/USD exchange rate, with the non-memory division's results expected to improve significantly compared to the previous quarter. This is attributed to improved production yields of 5nm foundry and the full-scale price increase of foundry services.

The semiconductor division's estimated results are 27.8 trillion KRW in revenue (+22% QoQ) and 10.1 trillion KRW in operating profit (+45% QoQ), contributing the most to the company's overall profit increase. Due to increased demand centered on servers, DRAM shipments are expected to rise 4% QoQ, exceeding the previous guidance of flat, and prices are expected to increase by nearly 10%, remaining robust. In particular, the memory division's operating profit margin is expected to reach 44% due to cost reduction effects from expanding the production ratio of 1znm and 128-layer 3D NAND, significantly surpassing competitors SK Hynix's 35% and Micron's 37%.

Won-sik Lee, a researcher at Korea Investment & Securities, emphasized, "Although fixed cost burdens will increase from Q4 due to the operation of the 1anm process, Samsung Electronics' EUV technology competitiveness within the DRAM industry will be further highlighted as EUV production experience is rapidly accumulating through mass production of 1znm (DRAM) and 5nm (foundry)."

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