[Click eStock] "Samsung Electronics Must Enhance Manufacturing Process Technology Competitiveness... Target Price Down"

On the 1st, BNK Investment & Securities diagnosed that enhancing semiconductor manufacturing process technology competitiveness is an urgent task for Samsung Electronics. The investment opinion 'Buy' was maintained, but the target price was lowered from the previous 81,000 KRW to 76,000 KRW.

Samsung Electronics Seocho Building. Photo by Jinhyung Kang aymsdream@

Samsung Electronics announced confirmed results for the third quarter on a consolidated basis the day before, with sales of 79.1 trillion KRW and operating profit of 9.18 trillion KRW. The operating profit was below the market expectation of 10.77 trillion KRW. Minhee Lee, a researcher at BNK Investment & Securities, analyzed, "The third quarter operating profit fell significantly short of expectations due to increased costs," adding, "One-time expenses such as bonus reserves, increased costs including research and development expenses and depreciation, and a low proportion of premium products such as high-capacity server memory and High Bandwidth Memory (HBM) 3E were factors behind the sluggish performance."

The researcher diagnosed that it is urgent for Samsung Electronics to enhance its semiconductor manufacturing process technology competitiveness. He said, "Since the North American customer's new product lineup was revised to 12 layers, the actual supply volume is limited. Whether the 12-layer certification will be achieved in the first half of next year will be more important," and added, "Furthermore, the semiconductor investment efficiency and productivity indicators, which have been continuously declining since 2022, are recently leading to concerns about competitiveness deterioration, which is unfortunate."

However, he judged that further decline would be limited. The researcher said, "The stock price has already fallen to the lowest point of the historical valuation band, reflecting the deterioration in mobile demand in the second half. Further decline is expected to be limited."