Shinhan Investment Corp. noted that expectations for a recovery in Samsung Electronics' performance are increasing. It raised the target stock price from 73,000 won to 77,000 won and suggested a 'buy' investment opinion. On the 1st, Samsung Electronics' closing price was 58,800 won.
On the 2nd, Kim Hyung-tae, a Research Institute at Shinhan Investment Corp., said, "Samsung Electronics will sustain a recovery trend throughout the year after confirming its performance bottom in the first quarter," adding that "the rising trend in memory prices will continue, leading to a gradual recovery."
In the second half, as the sales share of high bandwidth memory (HBM) expands, profitability in memory is expected to improve. Shinhan Investment Corp. presented an estimated operating profit for Samsung Electronics this year as 34.7 trillion won, which is 7.6% higher than before. Kim noted, "If significant results are confirmed, additional upward adjustments to performance estimates are possible."
However, dramatic growth is not expected in the first quarter. Known negative factors such as seasonal off-peak, poor foundry utilization rates, HBM order gaps, and intensified competition in displays (Samsung Display Corp.), TVs, and home appliances have already been reflected in the consensus and stock price.
Shinhan Investment Corp. estimated Samsung Electronics' first-quarter sales at 76.8 trillion won and operating profit at 5 trillion won. This is similar to the market consensus of sales 77 trillion won and operating profit 5.1 trillion won.
Kim said, "Operating profit by institutional sector is estimated to be 500 billion won for semiconductors (DS), 3.4 trillion won for mobile (MX/NW), 400 billion won for home appliances (VD/CE), 400 billion won for displays (SDC), and 400 billion won for Harman."
Regarding semiconductors, he explained, "Memory shipment volume (B/G) and prices (ASP) are expected to remain sluggish as anticipated," adding, "While a rebound in foundry utilization rates has been confirmed for legacy sectors, the deficit has slightly widened."
Regarding mobile, he added, "With the effects of exchange rates and new product launches, the scale is expected to grow compared to the previous year," stating that "profitability is also expected to be better than fears due to cost reductions."