[Click eStock] "Samsung Electronics, Target Price Lowered... Q3 Earnings Expected to Fall Short of Estimates"

Possibility of Backlash Due to Price Increase for Set Clients

Samsung Electronics announced its preliminary earnings for the second quarter of this year, with sales of 74 trillion won and an operating profit of 10.4 trillion won. These results represent an earnings surprise, increasing by 23.31% and 1452.24% respectively compared to the same period last year. On the 5th, at Samsung Electronics Seocho Tower in Seoul. Photo by Jo Yongjun jun21@

DB Financial Investment forecasted on the 6th that Samsung Electronics' third-quarter earnings will fall short of market expectations. The investment opinion remains 'Buy,' but the target price has been lowered to 100,000 KRW.

Seoseungyeon, a researcher at DB Financial Investment, stated, "Samsung Electronics' third-quarter sales are expected to reach 78.9 trillion KRW, a 17% increase year-on-year (a 6% increase quarter-on-quarter), and operating profit is expected to be 11.1 trillion KRW, a 355% increase year-on-year (a 6% increase quarter-on-quarter)." He added, "These figures are expected to fall short of market expectations by 6% and 19%, respectively."

Researcher Seo explained, "In the third quarter, weak business-to-consumer (B2C) demand, the reflection of bonus provisions in the Device Solutions (DS) division, and a reduction in the reversal of memory inventory valuation loss provisions compared to the previous quarter are anticipated."

He further noted, "Due to the revision of Samsung Electronics' earnings estimates, the target price has been lowered to 100,000 KRW," and diagnosed, "Set customers experiencing profitability deterioration due to rising component costs are likely to resist memory price increases in the fourth quarter."

He evaluated, "Meanwhile, with slow improvement in B2C demand, it is unlikely that the System LSI and Foundry divisions, which are concentrated in mobile, will turn profitable."

However, Researcher Seo added, "Amid the AI facility investment competition, entry into the HBM3E market is expected in the second half of the year," and maintained a 'Buy' investment opinion on Samsung Electronics.