Samsung Electronics Target Price Raised... Memory Price Decline Moderate

[Asia Economy Reporter Park So-yeon] NH Investment & Securities has raised the target price of Samsung Electronics from 100,000 won to 105,000 won while maintaining a buy rating.

According to FN Guide on the 8th, NH Investment & Securities stated in a recent report, "The preliminary results for Q4 2021 fell short of estimates due to increased initial semiconductor process costs and special bonus payments," adding, "The decline in memory prices was more favorable than previously expected, which is positive."

Do Hyun-woo, a researcher at NH Investment & Securities, said, "We maintain a 'buy' rating on Samsung Electronics and raise the target price from 100,000 won to 105,000 won," citing upward revisions in earnings estimates from 2022 onward.

On the 7th, Samsung Electronics announced its preliminary Q4 results, recording sales of 76 trillion won and operating profit of 13.8 trillion won. Operating profits by division are estimated at 8.62 trillion won for semiconductors, 860 billion won for displays, 3.02 trillion won for IM, and 820 billion won for CE. The operating profit fell short of NH Investment & Securities' estimates and consensus, which was interpreted as due to increased initial semiconductor process costs and a 200% special bonus payment.

Researcher Do explained, "The decline in DRAM and NAND prices was more favorable than previously expected," adding, "To defend against price drops, the company is pursuing a strategy focused on selling high-end products and actively expanding inventory."

He forecasted, "Due to the delayed end of COVID-19, non-face-to-face demand is increasing again in PCs and data centers," and "Orders from data center clients are expected to rise due to concerns over future component supply."

Despite being the off-season, IM showed favorable shipments of mid- to low-priced smartphones, with sales of the Z Fold3 and Z Flip3 increasing compared to the previous quarter. However, the display division is expected to see a slowdown in performance due to falling prices of large LCDs.

Researcher Do Hyun-woo said, "The memory semiconductor down cycle in the first half of 2022 is expected to be less severe than before, which is positive for the stock price," adding, "Due to still strong non-face-to-face demand, the decline in DRAM prices is limited to -7% in Q1."

He continued, "The annual price decline rate is also expected to be favorable at -8%," and mentioned, "Due to conservative investments by memory companies, memory prices could rebound in the second half."

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