[Click eStock] Growing Recognition of Industry Bottom... Expectation for Samsung Electronics Stock Price Recovery Start

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[Asia Economy Reporter Lee Seon-ae] IBK Investment & Securities announced on the 21st that it maintains a buy rating and a target price of 70,000 KRW for Samsung Electronics. This is due to the growing perception that the industry is at its bottom, following conservative investments and earnings forecasts from competitors.

Kim Un-ho, a researcher at IBK Investment & Securities, explained, "Although the industry improvement is not expected to be significant enough to drive a sharp rise in stock prices, the narrowing decline in DRAM prices can also act as a factor influencing the stock price." He added, "While a rebound in DRAM prices is unlikely, we expect the decline to significantly lessen from the first quarter of 2023, and supply and demand may find balance in the second half."

He assessed that overall demand in the fourth quarter of this year will be sluggish. Samsung Electronics' sales for Q4 are expected to decrease by 8.0% from the previous quarter to 70.163 trillion KRW, and operating profit is forecasted to drop by 44.1% to 6.063 trillion KRW. He predicted, "This outlook is significantly weaker than previous forecasts, and most business units are likely underperforming compared to initial plans due to weak downstream demand." He added, "The KRW-USD exchange rate is also believed to have had a negative impact," and "All business units except VD/Home Appliances and Harman are expected to see a decline in operating profit compared to Q3, and although an increase was anticipated in the display segment, issues with North American clients make this unlikely."

The decline in semiconductor operating profit is expected to continue for the time being. However, the drop in the quarterly average selling price (ASP) of DRAM is expected to narrow until the third quarter of 2023. Researcher Kim noted, "Supply in 2023 is limited, but inventory levels remain high, and it is still too early to expect a demand recovery." He further assessed, "The display segment has maintained high profitability after withdrawing from LCD, but Q4 performance is expected to fall short of expectations due to client-related variables."

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