"Samsung Electronics Shows Solid Performance, Time to Advance Rather Than Retreat"[Click e-Stock]

Solid Memory Demand, Stable Earnings Outlook
Minimal Impact from Rising Logistics Costs Due to Strait of Hormuz

An analysis has emerged suggesting that the recent sharp decline in Samsung Electronics' stock price is excessive. Despite ongoing geopolitical risks such as the war between the United States and Iran, it has been characterized as a "panic sell," with the company's performance and fundamentals remaining intact.

On March 5, Mirae Asset Securities maintained its target price for Samsung Electronics at 275,000 won and its "buy" investment rating for the same reasons. The previous day's closing price was 172,200 won.

Following the U.S. airstrike on Iran on February 28, Samsung Electronics' stock price dropped by 20.5% in just three trading days. This decline exceeded the drop in the KOSPI index (-18.4%) and was five times greater than the drop in the Philadelphia Semiconductor Index in the United States (-4.1%) during the same period.

Due to this sharp drop, Samsung Electronics' forward price-to-earnings ratio (PER) fell to 5.4 times and its price-to-book ratio (PBR) dropped to 1.8 times. It is assessed that only the company's valuation has decreased, while its earnings outlook has not been downgraded. The PER is well below its historical average of 7.3 times, and the PBR has fallen below the previous high of 2.0 times set in December 2020.

Despite the decline in the stock price, memory prices remain stable. The spot price for DDR5 DRAM (16Gb) rose by 0.08%, while DDR4 fell by 0.25%, remaining within a stable range. Even during the three trading days following the U.S. airstrike on Iran, prices fell only by 0.8% and 3.4%, respectively. Most of the demand already comes from U.S. big tech companies, which are insulated from the Middle East conflict, and the IT set shipments for general consumers have already reflected a record decline in shipment volume.

The report also analyzed that supply chain uncertainties could further strengthen the trend toward securing safe memory inventories, while at the same time making suppliers reluctant to invest in new facilities. Younggeon Kim, a researcher at Mirae Asset Securities, stated, "We are maintaining this year's estimated operating profit at 22.7 trillion won, and as earnings are compiled and released, the stock price is expected to recover to its proper level." He added, "The home appliance business is exposed to higher logistics costs due to the Strait of Hormuz issue, but its profit contribution is already as low as 0.5%."

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