[Featured Stocks] Samsung Electronics and SK Hynix Fall on 1Q Earnings Disappointment Forecast ↓

Amid the decline in the KOSPI due to the U.S. Federal Reserve (Fed) raising the benchmark interest rate by 25bp (1bp = 0.01 percentage points), South Korea's leading semiconductor stocks are also falling. This is due to forecasts that Samsung Electronics and SK Hynix's first-quarter earnings will fall short of expectations.

As of 9:12 a.m. on the 23rd, Samsung Electronics is trading at 60,700 KRW, down 0.65% (400 KRW) from the previous day. SK Hynix is at 85,800 KRW, down 1.27% (1,100 KRW).

Seung-yeon Seo, a researcher at Shin Young Securities, stated on the day, "Samsung Electronics' first-quarter sales are expected to decrease by 9% from the previous quarter to 63.9 trillion KRW, and operating profit is expected to plunge 92% from the previous quarter to 320 billion KRW," adding, "These figures are expected to fall short of market expectations by 1% and 76%, respectively."

Researcher Seo explained, "Due to the seasonal off-season and inventory adjustments by customers, sluggish memory semiconductor shipments, deteriorating profitability in semiconductor logic design (S.LSI), and a decline in foundry utilization rates focused on legacy processes, the semiconductor (DS) operating loss is expected to be 4.1 trillion KRW."

Gwang-jin Kim, a researcher at Hanwha Investment & Securities, also said, "First-quarter sales are expected to decrease by 9% from the previous quarter to 64.3 trillion KRW, and operating profit is expected to drop 70% to 1.28 trillion KRW," analyzing that "the main cause is the profitability decline in the DS division, which is expected to decrease sharply by 3.3 trillion KRW (DRAM -1 trillion KRW, NAND -2.3 trillion KRW)."

On the 21st, a report predicting a loss in Samsung Electronics' operating profit also drew attention. Yang-jae Kim, a researcher at Daol Investment & Securities, forecasted, "First-quarter sales will decrease by 21.1% year-on-year to 61.3 trillion KRW, and operating loss will turn to 68 billion KRW."

SK Hynix is also expected to report a first-quarter operating loss that falls short of estimates. Young-min Ko, a researcher at Shinhan Investment Corp., predicted, "Operating loss is expected to be 3.8 trillion KRW, which is worse than the estimate (-3.5 trillion KRW)," adding, "The recovery in front-end demand remains slow."

However, the securities industry evaluates that the poor earnings have already been reflected in the stock prices. With an expected recovery in the memory market in the second half of the year, performance improvement is anticipated from the second quarter onward.