Yuanta Securities Korea said on the 8th that although Samsung Electronics delivered a second-quarter earnings surprise, its share price fell, which it analyzed was due to concerns that the growth path may be slowing as the strength of the earnings surprise weakens.
On the 7th, Samsung Electronics announced preliminary consolidated results for the second quarter with revenue of 171 trillion won and operating profit of 89.4 trillion won.
Shin Hyeon-yong, an analyst at Yuanta Securities Korea, said, "On an operating-profit basis, the company posted the highest quarterly results, recording a high growth rate of 1,810.3% year over year, but the share price of Samsung Electronics fell about 6.9%," adding, "The KOSPI index (-4.9%) and SK hynix (-6.1%) both showed widening declines."
Shin analyzed that concerns about a slowdown in the growth path, as the strength of the earnings surprise weakened on the profit side, affected the share price.
Samsung Electronics' second-quarter operating profit achieved about 105.1% versus the one-month average estimate. In absolute terms, it was still strong, beating the consensus (the market's average forecast), but the explanation was that the surprise strength weakened compared with the previous quarter (156.0%).
Shin said, "The narrowing of the earnings surprise range also means the market's profit estimate accuracy has improved," adding, "As unreflected industry improvement factors to be additionally priced in after the results are announced shrink, the room for future profit estimates to be sharply revised upward could also shrink."
In the end, it was interpreted as the result of concerns about a slowdown in profit growth, which had driven the share price higher, being reflected as the virtuous cycle—where a strong earnings surprise led to estimate revisions and then to a re-rating—lost strength.
However, as this is only the beginning of the second-quarter earnings season, Shin explained that it is difficult to conclude the profit growth path of the semiconductor sector based solely on Samsung Electronics' preliminary results.
Shin said, "Looking at the earnings seasons from the third quarter of last year to the first quarter of this year, after Samsung Electronics released a strong earnings surprise, profit estimates across the semiconductor sector were sharply revised upward," adding, "Subsequently, with U.S. big tech results and SK hynix results, additional end-of-month upward revisions to profit estimates occurred."
In this earnings season as well, results announcements by U.S. big tech and SK hynix are scheduled for the end of this month.
Shin added, "After U.S. big tech's capital expenditure (CAPEX) guidance and SK hynix's high-bandwidth memory (HBM) results and outlook are confirmed, we will be able to judge the growth path of the semiconductor sector clearly."