[Click eStock] "Samsung Electronics Expected to Benefit from Semiconductor Upcycle in 2024"

[Asia Economy Reporter Son Sunhee] KB Securities maintained a target price of 75,000 KRW and a buy rating for Samsung Electronics on the 22nd, anticipating benefits from the semiconductor upcycle in 2024. However, they pointed out that a short-term decline in earnings is inevitable.

Samsung Electronics' Q4 sales are estimated to be 71.5 trillion KRW, down 6.6% from the same quarter last year. Operating profit is expected to fall short of consensus, estimated at 5.8 trillion KRW, a 58.2% decrease compared to the same period.

In particular, Q4 semiconductor operating profit is estimated at 1.8 trillion KRW, an 80% decrease from the same period last year. This is due to a sluggish market caused by intensified price declines despite increased memory shipments and a drop in foundry utilization rates. The Q4 smartphone segment is also expected to record its lowest performance since Q2 2020 due to decreased shipments caused by weak sales.

KB Securities analyst Kim Dongwon stated, "Samsung Electronics' quarterly earnings in 2023 are expected to hit bottom in Q2, with performance improvements possible from the second half of the year. The display business is expected to achieve its highest performance this year and next, thanks to its dominant position in the small- and medium-sized OLED market. Additionally, based on abundant net cash (116 trillion KRW as of Q3), securing new growth engines through mergers and acquisitions (M&A) is anticipated." He added regarding the semiconductor sector, "Unlike competitors who are reducing capital expenditures and cutting production, Samsung Electronics is expected to achieve differentiated performance in the semiconductor segment going forward."

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