[Click eStock] Samsung Electronics Concerns Reflected in Stock Price... Target Price Lowered but Buy Maintained

[Asia Economy Reporter Lee Myunghwan] Shinhan Financial Investment announced on the 24th that it is lowering the target price for Samsung Electronics from the previous 105,000 KRW to 97,000 KRW, citing concerns over IT demand deterioration and weakening competitiveness in non-memory and smartphones following the Game Optimization Service (GOS) incident. However, the investment rating was maintained as "Buy."

Shinhan Financial Investment expects Samsung Electronics' sales this year to reach 317.6 trillion KRW, a 13.6% increase compared to the same period last year, and operating profit to rise 19.3% to 61.6 trillion KRW, setting a record high. By quarter, sales in Q1 are expected to decrease by 1.1% from the previous quarter to 75.8 trillion KRW, and operating profit to decline by 6.1% to 13 trillion KRW. The semiconductor segment is expected to decline due to falling memory prices, and the display (DP) segment due to seasonal factors, but the mobile segment (MX) is forecasted to improve significantly thanks to volume recovery and an increase in average selling price (ASP), according to Shinhan Financial Investment.

Despite the upward revision of earnings forecasts, the stock price outlook was lowered due to the effects of rising interest rates, concerns over IT demand deterioration caused by the Ukraine conflict, and worries about weakening competitiveness in non-memory and smartphones after the GOS incident. Researcher Choi Doyeon of Shinhan Financial Investment interpreted, "The current stock price reflects both the increase in discount rates and concerns about non-memory competitiveness, as well as partially reflecting demand deterioration concerns due to the Ukraine war."

Shinhan Financial Investment expressed regret that expectations for non-memory and smartphones have temporarily declined following the GOS incident. However, it pointed out that the structural growth of the non-memory semiconductor foundry market remains intact, and Samsung Electronics is the only company capable of competing with TSMC, which holds the number one global foundry market share.

Researcher Choi Doyeon of Shinhan Financial Investment stated, "It is time for the stock price to reflect the outlook for the memory upcycle," and predicted, "The stock price will rebound rapidly as the Russia-Ukraine issue is resolved."

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