[Click eStock] "Samsung Electronics, Proactive Investment Despite Recession... Profit Up When Industry Recovers"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jaehee] Korea Investment & Securities maintained its 'Buy' rating and target price of 83,000 KRW for Samsung Electronics on the 29th.

Samsung Electronics' Q4 earnings for this year are estimated at 74.16 trillion KRW in revenue and 6.95 trillion KRW in operating profit. These figures have been further revised downward from the previous estimates of 76.4 trillion KRW in revenue and 8.35 trillion KRW in operating profit. The memory downturn is ongoing with no signs of demand recovery, and as client inventory adjustments continue, average selling prices (ASP) are declining, especially for mobile DRAM used in smartphones. NAND, which recorded an operating margin in the low double digits in Q3, is expected to turn to a loss in Q4. Smartphone shipments are expected to decrease quarter-on-quarter, accompanied by ASP declines due to sales promotions, resulting in lower revenue and operating profit compared to Q3. The display segment, which posted a surprise performance in Q3, is also expected to see a decrease in operating profit compared to Q3, partly reflecting the impact of the Foxconn Zhengzhou plant shutdown.

Park Sangsoo, a researcher at Korea Investment & Securities, analyzed, "Although uncertainty in memory demand remains, macro issues such as China's zero-COVID policy, which led the demand decline, are easing faster than expected. Unlike competitors, Samsung maintained investments during the downturn, so when the market rebounds, we can expect profit increases from ASP rises along with market share gains."

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