[Featured Stock] Samsung Electronics, Investor Sentiment Revives on Strong Earnings "3% Uptrend"

[Asia Economy Reporter Lee Seon-ae] On the 7th, Samsung Electronics' stock price showed a rise of over 3% in early trading. At 9:46 a.m., Samsung Electronics was trading at 58,100 KRW, up 3.01% from the previous trading day. The opening price was 56,400 KRW. It is interpreted that low-price buying demand is flowing in as investment sentiment revives due to strong earnings.

On this day, Samsung Electronics announced its preliminary Q2 consolidated earnings with sales of 77 trillion KRW and operating profit of 14 trillion KRW. This represents an increase of 20.94% and 11.38%, respectively, compared to the same period last year. Despite a series of internal and external adverse factors such as the prolonged Russia-Ukraine war, inflation, and demand contraction due to economic slowdown, it achieved sales of 77 trillion KRW, the second highest ever. The sales for Q2 are the highest on record. Operating profit is the third highest ever.

Although segment-specific results were not disclosed, it is estimated that the semiconductor division led the strong performance. Securities firms estimate that Samsung Electronics earned around 10 trillion KRW in operating profit from the semiconductor division in Q2.

However, there are concerns about earnings slowdown in the second half of the year. The dominant view is that semiconductors may enter the economic slowdown impact zone. The reduction in real income due to inflation and other effects has significantly reduced consumer electronics consumption, leading to increased inventory, which is also a negative factor. Park Seong-soon, a researcher at Cape Investment & Securities, said, "Demand for server DRAM remains solid mainly in North America, but demand for PC DRAM continues to decline centered on consumers, and demand for mobile DRAM is weakening more than expected due to China's lockdown."

However, since Samsung Electronics is launching new foldable phone models, the 'Galaxy Z Fold4' and 'Galaxy Z Flip4,' it is expected to benefit from the new product effect. The foundry (semiconductor contract manufacturing) business is also expected to avoid a sharp decline in earnings as yield (the ratio of defect-free qualified products) stabilizes and product prices are rising.