When Will Samsung Electronics Rebound? Experts Are All In on 'Buy'...

Employees are moving at Samsung Electronics Seocho Building in Seocho-gu, Seoul, on the 6th, where Samsung Electronics reported a consolidated operating profit of 4.3 trillion KRW for the fourth quarter of last year, a 69% decrease compared to the same period last year. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Park So-yeon] Recently, when meeting experts, the most frequently heard advice is to buy 'semiconductor-related stocks.' Veteran PBs at securities firms who only consult with high-net-worth individuals with assets exceeding 3 billion KRW, and experts designing investment products at asset management companies, unanimously recommend 'semiconductor-related stocks.' Although semiconductors are expected to remain unprofitable for the time being, is their advice truly accurate? If so, when should one start investing? Our collective curiosity: When will the stock price rebound of the 'national stock' Samsung Electronics begin? Major securities firms expect the effects of production cuts to become visible from the second quarter, with inventory normalization progressing in the third quarter.

KB Securities recently maintained a target price of 80,000 KRW and a buy rating for Samsung Electronics in their report. KB Securities anticipated that the direct production cuts implemented by global semiconductor companies since the fourth quarter of last year, along with indirect production cut effects from line rearrangements and delays in new expansions in the first quarter of this year, will impact memory semiconductor supply and demand improvements starting from the second quarter. In particular, memory semiconductor inventories held by North American server and Chinese smartphone companies are expected to decline for the first time in a year in the first quarter of this year. They forecast inventory levels approaching normal in the second quarter and inventory normalization from the third quarter.

Hyundai Motor Securities set a target price of 78,000 KRW and a buy rating for Samsung Electronics. They expect supply and demand to improve from the second half of the year due to active supply reduction efforts by memory companies, with significant depletion of customer inventories starting from the second quarter of this year. Due to the delayed launch of Intel's SPR, server DDR5 demand is projected to increase substantially from the third quarter. As visibility of supply reductions is expected to increase in 2024, mobile memory semiconductor demand is also anticipated to rise from the second half of this year.

Hi Investment & Securities maintained a target price of 75,000 KRW and a buy rating for Samsung Electronics. They projected Samsung Electronics' operating profit for the first quarter of this year at 3 trillion KRW. In the memory semiconductor sector, an operating loss of 1.7 trillion KRW is expected, and maintaining profitability in DRAM is anticipated to be challenging. They expect performance deterioration to continue through the second quarter. Annual operating profit for this year is forecasted to remain at 19 trillion KRW, a 56% decrease compared to the previous year. They anticipate that customer inventory rebuilding will begin after the third quarter, with demand recovery in the fourth quarter leading to a semiconductor industry recovery.

BNK Investment & Securities maintained a target price of 77,000 KRW and a buy rating for Samsung Electronics. They expect Samsung Electronics' semiconductor division to record operating losses consecutively in the first and second quarters of this year due to deteriorating memory performance and declining foundry utilization rates. This is the first time since the 2001 dot-com bubble collapse and the late 2008 US financial crisis?periods marked by extremely weak demand and surging inventories?that Samsung Electronics' semiconductor division has recorded losses for two consecutive quarters. The fact that an industry-leading company is posting losses suggests a high possibility that the industry has bottomed out, as there has never been a case of losses lasting more than two quarters. They forecast a strong recovery in the second half of the year.