[Click eStock] "Samsung Electronics' Stock Price Will Not Fall Below 50,000 Won"

BNK Investment & Securities Report

[Asia Economy Reporter Minji Lee] On the 20th, BNK Investment & Securities maintained its buy rating on Samsung Electronics and set a target price of 77,000 KRW, down 11% from the previous target.

BNK Investment & Securities lowered its Q2 consolidated operating profit estimate from 16.2 trillion KRW to 15.3 trillion KRW. This revision was due to a downward adjustment of the DX division's operating profit from 4.2 trillion KRW to 3.4 trillion KRW. The DX division includes Video Display (VD) and Mobile (MX) sectors, with the mobile segment's operating profit lowered from 3.5 trillion KRW to 2.8 trillion KRW. Although Galaxy S22 sales were favorable, the demand for mid- to low-priced phones declined more sharply than expected due to the slowdown in consumer spending, resulting in a forecasted 16% decrease in mobile phone sales compared to the previous quarter, totaling 62 million units.

Minhee Lee, a researcher at BNK Investment & Securities, stated, “Inflation and the strong dollar are also negatively impacting profitability, and TV and home appliance performance are expected to be weak for the same reasons.”

The Display (SDC) division's performance is expected to be solid. Although demand for mid- to low-priced rigid displays was weak, demand for high-end flexible OLEDs was strong, and LCD production has already been sufficiently reduced. Therefore, the Display division's operating profit is expected to record a slight decrease from the previous quarter to 1.1 trillion KRW. With improvements in QD-OLED yield and the end of A3 depreciation, profitability is expected to improve significantly in the second half of the year.

Researcher Minhee Lee analyzed, “The Semiconductor (DS) division is expected to post a solid operating profit of 10.7 trillion KRW,” adding, “The second half will face a lukewarm peak season due to demand slowdown.”

The stock price is not expected to fall below 50,000 KRW. Currently, the company's stock price is in the process of normalizing back to pre-pandemic valuation levels due to rapid financial tightening aimed at curbing the endemic and inflation. The researcher explained, “With the base interest rate rising from nearly zero to 3-4%, it is reasonable for valuation multiples to decrease again,” and added, “The downward revision of expected earnings due to the consumer spending slowdown is also a factor in the stock price decline, but most of the negative factors have already been largely exposed, making buying effective.”

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