[Click eStock] "Samsung Electronics Target Price Lowered to 95,000 Won"

Q3 Smartphone Sales Expected to Decline
H2 Memory Shipments Projected Below Expectations
Earnings Forecast Revised Downward

[Image source=Yonhap News]

On the 9th, KB Securities forecasted that Samsung Electronics' memory shipment volume and price increases in the second half of the year would fall short of initial expectations. Accordingly, the target stock price was lowered to 95,000 KRW. However, considering the potential for price recovery following the recent sharp decline, the investment rating was maintained at 'Buy.'

Dongwon Kim, a researcher at KB Securities, stated, "Due to weak smartphone and PC sales in the third quarter, inventory levels at memory module companies have increased to 12-16 weeks, leading to memory shipment volumes and price increases in the second half falling below expectations."

Researcher Kim analyzed, "Smartphone and PC companies, which have been accumulating memory inventory since the third quarter of last year, are currently experiencing new product demand below expectations in the third quarter, and are expected to adopt a conservative strategy for purchasing memory and other components in the second half."

Accordingly, KB Securities revised Samsung Electronics' operating profit forecasts for 2024 and 2025 downward by 15% and 11%, respectively, to 37.9 trillion KRW and 57.7 trillion KRW.

The operating profit for the third quarter is estimated at 9.7 trillion KRW, a 298% increase year-on-year but a 7.3% decrease quarter-on-quarter, and is expected to fall short of the consensus operating profit estimate of 13.7 trillion KRW.

Researcher Kim explained, "This is because the Semiconductor (DS) division is experiencing shipment declines due to weak demand for B2C products, one-time costs (PS) are being reflected, LSI performance improvement is delayed due to low utilization rates, and the scale of inventory valuation loss reversals is expected to significantly decrease from the third quarter."

He further predicted, "Demand for B2C products (smartphones, PCs), which account for 40% of DRAM demand, is unlikely to recover significantly in the second half, so smartphone and PC companies are expected to focus on inventory depletion for the time being."

Researcher Kim noted, "Demand for AI and server memory such as HBM and DDR5 remains robust," and added, "Supply is expected to remain tight in the second half, which will accentuate the polarization of DRAM demand."

Meanwhile, Researcher Kim added, "Samsung Electronics' recent stock price is approaching a P/B ratio of 1, falling below the lower bound of the past 10-year average (1.2), so the downside risk for the stock price is expected to be limited going forward."

This content was produced with the assistance of AI translation services.