"Samsung Electronics with 'Worst Two-Hearted Sentiment': Securities Firms Say 'Further Decline Is Also Difficult'"

Samsung Electronics Trapped in the '50,000 Electronics' Quagmire
Prolonged Sales Stagnation... 'Continued Overselling'
"Short-term Rebound Possible, Long-term Outlook Uncertain"

Samsung Electronics has yet to shake off its sluggish stock performance. Despite some skepticism in the securities industry regarding Samsung Electronics' recovery of technological competitiveness, experts expect that further declines will be limited and that at least a short-term rebound is possible.

According to the Korea Exchange on the 2nd, Samsung Electronics closed at 58,300 won, down 900 won (-1.52%) from the previous trading day, marking a 34.35% drop from its peak in July. Since entering the "50,000 won" range intraday on the 2nd of last month, it has yet to break above 50,000 won. On the 31st of last month, when confirmed earnings were announced, the stock rose more than 3% on expectations of expanded sales of high-bandwidth memory (HBM) 3E to major clients, but selling pressure returned, and the closing price ended with a slight gain.

Although Samsung Electronics' stock price continues to underperform, worsening investor sentiment, securities experts unanimously agree that further declines will be limited. In particular, foreign selling, identified as a major cause of the stock's downward trend, is expected to decrease. Jeong In-ji, a researcher at Yuanta Securities, said, "Foreign investors have periodically increased and then reduced their net selling of Samsung Electronics regardless of market direction. Previously, the bottom was around 10 trillion won, but this time it reached about 16 trillion won, which is somewhat excessive. Going forward, as the net selling volume decreases, downward pressure will be limited."

Some go beyond the cautious view that further declines will be limited and argue that the current stock price is in a buying zone. Yang Hae-jung, a researcher at DS Investment & Securities, explained, "Empirically, Samsung Electronics is a stock with strong resilience. Such stocks should be approached with buying when bottom indicators appear. Both macroeconomic and bottom-up indicators show that Samsung Electronics is at the bottom."

Yang also pointed out that investment sentiment toward Samsung Electronics is at a low point. He said, "For companies like Samsung Electronics, which grow cyclically and have a large market capitalization with diverse earnings forecasts, investment sentiment can be confirmed through the earnings revision ratio. Looking at Samsung Electronics' earnings revision ratio, investment sentiment is at bottom levels."

With investment sentiment at a low and the economic cycle normalizing, Yang predicted a positive stock price trend. He said, "The U.S. economy has been strong in the service sector during the rate hike phase. Because interest rates were high, companies were reluctant to expand production, so the manufacturing sector was sluggish. Now that interest rate cuts have begun again, if the economic cycle normalizes and manufacturing recovers, it will help Samsung Electronics' growth."

However, there is an analysis that investors should expect only a short-term rebound and remain cautious about medium- to long-term investments. Lee Eun-taek, a researcher at KB Securities, said, "Samsung Electronics is oversold, so a short-term rebound is expected. However, it seems difficult for Samsung Electronics to return as a 'leading stock' next year." He added, "Samsung Electronics has experienced stagnant sales for 11 years since 2013. This is the first time in Samsung Electronics' history to have over 10 years of sales stagnation. The current slump is not simply due to 'HBM failure' but may be a more fundamental issue."

He continued, "Of course, there may be other ways to increase sales, and Samsung Electronics might find that path. But until such signals appear, it will be difficult for it to play a leading role. A conservative approach is needed for the medium- to long-term perspective."