[Click eStock] "Samsung Electronics Business Conditions Improve and Semiconductor Prices Rise... Target Price Up"

NH Investment & Securities raised the target price for Samsung Electronics to 95,000 KRW on the 5th, citing "an overall improvement in the industry conditions and an increase in semiconductor prices." The buy rating was also maintained. The closing price on the previous day was 76,600 KRW.

Seoul Samsung Electronics Seocho Building. Photo by Jinhyung Kang aymsdream@

On the same day, researchers Ryu Young-ho and Moon So-young from NH Investment & Securities stated, "Samsung Electronics' sales in the fourth quarter of last year were 71.3 trillion KRW, up 5.7% from the previous quarter, and operating profit was 4.2 trillion KRW, an increase of 73.6% from the previous quarter, exceeding market expectations," adding, "Growth in memory shipments and price increases led to external growth, and a reduction in losses resulted in better-than-expected performance."

They further analyzed, "In the fourth quarter of last year, DRAM had a bit growth (increase rate of production volume converted to bits) of 26% and an average selling price (ASP) increase of 15%," and "NAND's bit growth and ASP are estimated at 24% and 14%, respectively. For Display (SDC), the effect of new products from North American customers continues, but recent sales sluggishness and competitor entries were taken into account."

Researcher Ryu explained, "Currently, Samsung Electronics has limited valuation (stock price level relative to corporate value) pressure," and "the supply and demand are improving as new product launches from some customers in PC and mobile sectors coincide with restocking demand." He also noted that general servers, which had been a concern, are expected to gradually recover after inventory adjustments.

Additionally, Researcher Ryu added, "Recovery in upstream industries leading to improved operating rates and increased demand for general memory will connect to a sharp performance improvement for Samsung Electronics in the second half of the year," and "the proportion of HBM (High Bandwidth Memory) and advanced process products, which had been discount factors, will gradually increase, alleviating market concerns."