[Click eStock] "Samsung Electronics, Bottoming Out... Next Year's 1Q Is the Turning Point"

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[Asia Economy Reporter Kwon Jae-hee] BNK Investment & Securities maintained a 'Buy' rating on Samsung Electronics on the 23rd, setting a target price of 77,000 KRW.

Samsung Electronics' Q4 and full-year results for this year are expected to show sales of 71 trillion KRW and operating profit of 6.59 trillion KRW, representing declines of 7% and 52% respectively compared to the same period last year. The deterioration in the memory and smartphone segments is anticipated to be the main cause of the company's overall poor performance.

Operating profits by business division are estimated as follows: semiconductors at 2.19 trillion KRW, displays at 1.92 trillion KRW, Device Experience (DX) division at 2.24 trillion KRW, and Harman at 250 billion KRW. For smartphones, due to weak demand and a product mix skewed towards mid- to low-end models, the average selling price (ASP) is expected to fall by 14% quarter-on-quarter, with sales volume decreasing by 5%. In memory, ongoing inventory adjustments by customers are expected to cause ASPs for DRAM and NAND to decline by 21% and 22% quarter-on-quarter, respectively.

In the first quarter of next year, operating profit is projected to further decrease to 4.36 trillion KRW, marking a bottom. The semiconductor division is expected to turn to a loss due to additional performance declines in the memory segment and worsening non-memory results caused by reduced foundry utilization rates. Although profitability in the Mobile Experience (MX) division is expected to improve with new model launches, the negative impact from declining semiconductor and display segment results is expected to be much greater. Quarterly results are anticipated to gradually recover from the second quarter of next year as semiconductor profitability improves.

Minhee Lee, a researcher at BNK Investment & Securities, analyzed, "In the core memory business, as confirmed by recent Micron results, chip makers currently have very high inventory levels, while customer inventories have peaked and are decreasing." He added, "We believe this is a bottom-forming period, and expect a turning point in the first quarter of next year."

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