[Click eStock] "Samsung Electronics, 2Q Memory Semiconductor Profitability Improvement"

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[Asia Economy Reporter Hwang Yoon-joo] Kiwoom Securities maintained its investment opinion of 'Buy' and a target price of 100,000 KRW for Samsung Electronics on the 8th, stating that the profitability of memory semiconductors is expected to improve in the second quarter.

Park Yoo-ak, a researcher at Kiwoom Securities, stated, "The second-quarter earnings are expected to record sales of 72.2 trillion KRW (-6% QoQ) and an operating profit of 14.5 trillion KRW (+3% QoQ), exceeding initial expectations."

Researcher Park cited the memory semiconductor business, which has entered a recovery phase in the industry, as the reason for the strong performance. He explained, "Among the memory segments, DRAM is expected to see a shipment growth rate (bit growth) of +9% QoQ due to strong server demand, and prices will fall below the cost/bit reduction rate, leading to improved profitability."

Researcher Park predicted, "NAND will achieve significant profitability improvement as price increases (+8% QoQ) and shipment volume growth (+13% QoQ) occur simultaneously."

He evaluated, "Samsung Electronics' semiconductor division will record sales of 27.7 trillion KRW (+9% QoQ) and an operating profit of 9.6 trillion KRW (+18% QoQ), driving the company's overall earnings growth."

Researcher Park emphasized regarding Samsung Electronics' stock price decline, "From this point onward, attention must be paid to 'the increasing server demand despite various concerns' and 'the DRAM supply volume decreasing more than planned.'"

He analyzed, "The first half of this year is a process of absorbing the already expanded DRAM production capacity, but in the second half, which enters the peak demand season, the growth rate of DRAM supply will begin to decrease. This supply contraction will stimulate competitive purchasing sentiment among customers, leading to a price rebound of fixed DRAM prices in the third quarter."

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