Samsung Electronics, Has Negative News Been Priced In?... Stock Holds Up Despite Q3 Slump

Recent Rebound Due to Foreign Buying
Stock Market Experts Say "Time to Buy at Low Prices"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Can Samsung Electronics maintain its position as the "national stock"? Once threatened even below the 50,000 KRW mark amid talks of "40,000 KRW Samsung Electronics," the company has recently recorded an upward trend supported by four consecutive days of foreign investors' buying. Attention is focused on whether the buying momentum will continue after Samsung Electronics' Q3 earnings announcement today. However, since the weak performance was already anticipated, some forecasts suggest that the stock price has already factored this in and will not suffer significant damage.

According to the Korea Exchange on the 7th, as of 9:05 AM, Samsung Electronics' stock price was trading at 55,300 KRW, down 1.78% from the previous trading day. After hitting a low of 51,800 KRW during trading on the 30th of last month, Samsung Electronics successfully rebounded and closed higher for four consecutive trading days until yesterday.

The rise in Samsung Electronics' stock price is attributed to net buying by foreign investors. Foreign investors have been net buyers for four consecutive trading days since the rebound began on the 30th of last month, purchasing Samsung Electronics shares worth a total of 641.2 billion KRW during this period. This is the largest amount among all stocks bought by foreign investors. Conversely, individual investors sold Samsung Electronics shares worth 486.4 billion KRW during the same period, making it the top stock for net selling among individual investors.

The market's focus is on the stock price movement following Samsung Electronics' Q3 earnings announcement. On the 7th, Samsung Electronics announced its preliminary consolidated Q3 results, reporting sales of 76 trillion KRW and operating profit of 10.8 trillion KRW. Compared to the same period last year, sales increased by 2.73%, while operating profit decreased by 31.73%. These figures are below the securities firms' consensus estimates of 78.3586 trillion KRW in sales and 11.8738 trillion KRW in operating profit.

Choi Do-yeon, director at Shinhan Investment Corp., said, "The decline in demand for sets such as smartphones, PCs, and TVs is very rapid," adding, "The reduction in semiconductor orders is even faster, which can be interpreted as a significant order cut due to inventory burdens."

Some expect the impact of Samsung Electronics' weak Q3 performance on its stock price to be limited. This is because the current stock price already reflects numerous concerns, including the semiconductor market conditions.

Park Yoo-ak, a researcher at Kiwoom Securities, analyzed, "Although memory semiconductor prices in the second half of this year are expected to fall significantly below our estimates, customers' inventory adjustments will be completed after the first quarter of next year," adding, "It is time to start buying Samsung Electronics at a low price."

Meanwhile, securities firms set Samsung Electronics' target stock price around the 70,000 KRW level. Korea Investment & Securities set a target price of 83,000 KRW, and Hi Investment & Securities suggested 72,000 KRW. Foreign firms Nomura Securities and Goldman Sachs proposed target prices of 74,000 KRW and 75,000 KRW, respectively.