[Click eStock] Samsung Electronics, Memory Price Decline Expected in Q1

Samsung Electronics achieved a record high performance with annual sales exceeding 279 trillion won. On the 7th, Samsung Electronics announced that its preliminary consolidated results for last year showed sales of 279.04 trillion won and an operating profit of 51.57 trillion won. Employees are arriving at Samsung Electronics Seocho Office on the same day. Photo by Moon Honam munonam@

[Asia Economy Reporter Junho Hwang] DB Financial Investment maintained its target price of 100,000 KRW per share for Samsung Electronics on the 10th.

Samsung Electronics' Q4 results recorded sales of 76 trillion KRW and operating profit of 13.8 trillion KRW, slightly below market expectations. DB Financial Investment stated that the exact cause can only be confirmed once the finalized results are announced, but it is estimated that one-time costs, including year-end special bonuses, occurred evenly across all business divisions. The estimated operating profits by division are 9.2 trillion KRW for semiconductors, 1.1 trillion KRW for displays, 2.8 trillion KRW for IM, and 600 billion KRW for CE.

In particular, following the reversal of memory prices in Q4 last year, a wider decline in prices is expected in Q1 this year. Due to low inventory levels of memory manufacturers and structural memory demand growth driven by the dawn of the digital era, the recent DRAM price decline is expected to be short and gradual over three quarters. The recent issue of the NAND line fab shutdown in Xi'an, China, is seen as contributing to NAND price stabilization. Samsung Electronics is projected to achieve record annual results this year with sales of 303.3 trillion KRW (+8.7%) and operating profit of 61.2 trillion KRW (+18.7%).

Researcher Gyujin Eo of DB Financial Investment analyzed, "The stock price has already hit a valuation (PER 10.5x) during the sharp downturn in the industry and is attempting a rebound," adding, "Short-term memory price declines and quarterly earnings weakness have already been reflected in the stock price." He continued, "With annual earnings growth still valid, the current stock valuation is only at PER 12.8x (2021E) and 10.9x (2022E),” concluding, “we maintain a buy rating.”

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