[Click eStock] "Samsung Electronics, Memory Division Profit Estimates Upgraded"

Supply Disruption of DRAM and NAND Due to Xi'an Lockdown in China
Korea Investment & Securities "Samsung Electronics Target Price Raised from 100,000 KRW to 105,000 KRW"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Korea Investment & Securities has revised upward its profit estimates for Samsung Electronics' memory division. This is due to a supplier-favorable environment created by supply disruptions in DRAM and NAND.

On the 5th, Korea Investment & Securities raised Samsung Electronics' memory division sales estimate for this year from the previous 82.6 trillion KRW to 89.2 trillion KRW, and operating profit estimate from 28 trillion KRW to 34.1 trillion KRW, an increase of 8% and 22%, respectively.

The reduced decline in memory prices affected the earnings estimates. The price drop for DRAM this year is expected to decrease from the previous 11% to 5%, and NAND from 13% to 7%. As the spot price of DRAM remains strong, the gap between spot and fixed prices as of the previous day was only -1.9%.

Won-sik Lee, a researcher at Korea Investment & Securities, explained, “While inventory at front-end companies for memory is decreasing due to improved set production, recent lockdown measures in Xi'an, China have caused supply disruptions in both DRAM and NAND,” adding, “The price negotiation environment is becoming more positive for suppliers.”

Accordingly, Korea Investment & Securities maintained its 'Buy' rating on Samsung Electronics and raised the target price from 100,000 KRW to 105,000 KRW. The closing price on the previous day was 78,700 KRW.

Meanwhile, Samsung Electronics' semiconductor division's profitability in the fourth quarter of last year is estimated to have somewhat deteriorated. Korea Investment & Securities projected the semiconductor division's Q4 sales to increase by 1% quarter-on-quarter to 26.6 trillion KRW, while operating profit is expected to decrease by 8% over the same period to 9.3 trillion KRW. The researcher said, “Shipments of DRAM and NAND increased by 2% and 8% quarter-on-quarter, respectively, due to server-centered demand growth,” but “profitability worsened due to the full-scale price decline.”

Profitability in the display division also appears to have worsened compared to the previous quarter. Korea Investment & Securities estimated Samsung Electronics' display division's Q4 sales to have increased by 13% quarter-on-quarter, while operating profit decreased by 3% over the same period to 1.4 trillion KRW. This was due to increased depreciation expenses from the operation of the Quantum Dot Organic Light Emitting Diode (QD-OLED) production line.

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