[Click eStock] 'Earnings Shock' Samsung Electronics... Securities Firms Begin Raising Target Prices

Two Securities Firms Raise Target Price to 60,000 Won Range
13 Securities Firms Maintain Target Price with "Buy on Dips Strategy"

[Asia Economy Reporter Ji Yeon-jin] The securities industry has started to raise the target price for Samsung Electronics, which announced 'earnings shock'-level results for the third quarter of this year.

On the 28th, NH Investment & Securities maintained a buy rating on Samsung Electronics and raised the target price from 67,000 KRW to 72,000 KRW. The basis for the target price increase was raising the 2024 earnings estimates and changing the valuation base year to 2023. Doh Hyun-woo, a researcher at NH Investment & Securities, said, "Due to memory manufacturers reducing production in 2023, a shortage of memory semiconductors is expected in 2024, and the resulting increase in Samsung Electronics' profits is expected to be greater than previously anticipated."

On the same day, Daol Investment & Securities slightly raised its previous target price from 68,000 KRW to 69,000 KRW.

Samsung Electronics hit a 52-week low of 52,900 KRW on the 29th of last month but has steadily risen since then. Especially ahead of the announcement of confirmed third-quarter results for this year (October 27), the stock price rose for four consecutive days, and even on the day after the disappointing results were announced, it showed a slight upward trend, recovering to 59,500 KRW.

Samsung Electronics announced sales of 76.78 trillion KRW for the third quarter of this year, down 0.6% year-on-year, and operating profit fell 23.0% to 10.85 trillion KRW. In particular, semiconductor operating profit was halved (-48.7%) to 5.1 trillion KRW, and home appliances (CE) also declined by 30.6% to 300 billion KRW.

After the announcement of these results, most securities firms maintained their buy ratings and target prices. The target prices were maintained as follows: ▲Korea Investment & Securities (83,000 KRW) ▲Samsung Securities (90,000 KRW) ▲Ebest Investment & Securities (80,000 KRW) ▲Kiwoom Securities (73,000 KRW) ▲Shinhan Investment Corp. (70,000 KRW) ▲SK Securities (75,000 KRW) ▲DB Investment & Securities (83,000 KRW) ▲Hyundai Motor Securities (78,000 KRW) ▲Daol Investment & Securities (72,000 KRW) ▲Cape Investment & Securities (80,000 KRW) ▲Meritz Securities (82,000 KRW) ▲Hana Securities (77,000 KRW) ▲BNK Investment & Securities (77,000 KRW) ▲KB Securities (75,000 KRW).

Despite uncertainties in the semiconductor market next year, Samsung Electronics' statement that it will not make artificial adjustments is cited as a reason why securities firms highly value Samsung Electronics' corporate value. Earlier, SK Hynix announced, "We will reduce next year's investment scale by more than 50% compared to this year's investment, which is expected to be in the high 10 trillion KRW range." This is a significant level of investment reduction comparable to the industry's capex decline rate in 2008-2009. Competitors such as Micron and Kioxia in the U.S. also announced unprecedented supply reduction strategies.

Park Yoo-ak, a researcher at Kiwoom Securities, said, "The price of memory semiconductors in the second half of this year also fell significantly below market expectations as expected, and considering the competitive environment within the memory semiconductor industry, NAND, which is approaching marginal cost, is expected to see market improvement in the first half of next year amid manufacturers' production cuts." He added, "In the case of NAND, reflecting Samsung Electronics' intention to expand market share, another round of downward revision of market forecasts is expected, and Samsung Electronics' stock price is expected to outperform the market and competitors for the time being."

Park Sung-soo, a researcher at Korea Investment & Securities, said, "Samsung Electronics' corporate value remains at a historically low level, which we believe excessively reflects the market conditions," and forecasted, "As market uncertainty increases, the competitiveness as a leading company will become more apparent."

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