Samsung Electronics Q3 Earnings Expected to Be 'Rosy'... Stock Price Remains 'Uncertain'

Samsung Electronics Q3 Operating Profit Expected at 16-17 Trillion Won
"Strong Earnings Likely to Have Limited Impact on Stock Price,
DRAM Price Decline and Set Production Disruptions Already Reflected in Stock Price"

[Asia Economy Reporter Minji Lee] As Samsung Electronics' preliminary third-quarter earnings announcement approaches, the securities industry is presenting rosy forecasts. However, since the stock prices of major global semiconductor companies continue to adjust, the stock price outlook is analyzed to be not as bright as the earnings for the time being.

According to financial information provider FnGuide on the 3rd, the estimated consolidated operating profit of Samsung Electronics for the third quarter of this year, as projected by the securities industry, was 15.7631 trillion KRW, an increase of 27.60% compared to the same period last year. The securities industry's forecast has also been revised upward, increasing by about 2.26% compared to the forecast of 15.415 trillion KRW one month ago, and by about 8.38% compared to the estimate of 14.5446 trillion KRW three months ago.

If Samsung Electronics posts profits at the level expected by the market in the third quarter, it is expected to record the highest operating profit in three years and the second highest on a quarterly basis. Samsung Electronics' operating profit in the third quarter of last year was 12.35 trillion KRW, the highest in two years since the 17.57 trillion KRW in the third quarter of 2018, which was called the 'semiconductor super boom period.'

Among securities firms, Kiwoom Securities had the highest forecast, with an expected operating profit of 17.239 trillion KRW. This was followed by Hi Investment & Securities (17.034 trillion KRW), Korea Investment & Securities (16.396 trillion KRW), Cape Investment & Securities (16.192 trillion KRW), Hanwha Investment & Securities (16.123 trillion KRW), and NH Investment & Securities (16.035 trillion KRW). The rise in the KRW-USD exchange rate is expected to positively reflect on earnings, and it is judged that the non-memory business division's performance will improve significantly compared to the previous quarter.

However, securities experts agreed that more time is needed for the stock price to rise. Looking at the appropriate stock price levels suggested by the securities industry, some have lowered their targets below 100,000 KRW. The highest target price was set by Cape Investment & Securities at 105,000 KRW, followed by Korea Investment & Securities and IBK Investment & Securities at 100,000 KRW, Kiwoom Securities at 95,000 KRW, and Hi Investment & Securities at 92,000 KRW.

This judgment is based on the fact that risk factors limiting stock price increases, such as sluggish IT set shipments due to a slowdown in untact demand and the trend decline in semiconductor stock valuation multiples, have not disappeared. Seongsoon Park, a researcher at Cape Investment & Securities, said, “The impact of strong third-quarter earnings on stock prices is expected to be limited because the decline in DRAM prices from the fourth quarter is already being reflected in stock prices,” adding, “In the fourth quarter, memory prices are expected to weaken due to set production disruptions caused by parts supply shortages and a slowdown in PC demand after COVID-19.”

Myeongseop Song, a researcher at Hi Investment & Securities, explained, “The global liquidity growth rate and the US ISM manufacturing relative strength, which are closely related to semiconductor stock valuations, have been declining since March this year, so the possibility of a short-term reversal to an increase in semiconductor stock valuation multiples is low,” and added, “Rather than actively buying now in anticipation of a semiconductor price rebound in the second to third quarter of next year, it is necessary to monitor industry risk factors and valuation-related indicators for the time being.”

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