[Click eStock] KB Securities "Expecting Largest Performance in 3 Years"... Maintaining 100,000 Won Electronics

[Asia Economy Reporter Ji Yeon-jin] KB Securities announced on the 5th that it expects Samsung Electronics' third-quarter earnings to reach the highest level in three years and maintains a target stock price of 105,000 won.

Kim Dong-won, a researcher at KB Securities, stated, "The semiconductor price decline cycle is expected to have reduced volatility and a shorter duration compared to past down cycles due to lower inventory and limited supply increases, leading to stronger earnings resilience than before." He added, "The non-memory and System LSI and display (DP) sectors are expected to see earnings level-up effects from price increases and new technology applications (3nm GAA, OLED)."

He continued, "In particular, memory inventory is understood to be at a normal level (7-8 weeks) for servers and mobiles, excluding PCs (8-10 weeks), and memory suppliers' inventory is estimated to be at 1 week (vs. normal inventory of 3-4 weeks), so the volatility of future memory price declines is expected to be significantly lower compared to the down cycle in the second half of 2018."

Samsung Electronics' third-quarter sales are estimated at 73 trillion won, a 9% increase year-on-year, and operating profit is estimated at 16.1 trillion won, a 30.4% increase. The operating profit is expected to exceed market expectations (15.8 trillion won) and achieve the highest performance in three years. By division, semiconductors (10 trillion won), IM (smartphones, 3.7 trillion won), DP (display, 1.5 trillion won), and CE (home appliances, 800 billion won) are included.

Meanwhile, fourth-quarter operating profit is expected to increase by 20.3% year-on-year to 15 trillion won due to a slowdown in memory price increases and seasonal demand decline.

Researcher Kim said, "Recently, Samsung Electronics' stock price has been sluggish due to concerns over weakened price negotiation power caused by increased memory inventory at customers and worries about a semiconductor cycle peak-out," but emphasized, "However, this semiconductor cycle is different from past B2C product (PC, notebook, mobile)-centered volatile down cycles, so it is time to focus on the changing memory cycle."

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