[Click eStock] "Samsung Electronics, Strong Q1 Performance Thanks to Smartphones... 'Diversified Business Structure' Positive"

Meritz Securities evaluated Samsung Electronics' preliminary first-quarter earnings on the 8th, stating, "The smartphone division led the performance, surpassing market expectations," and added, "This result is a positive indication that Samsung Electronics' diverse business structure is working complementarily."

On the same day, Samsung Electronics announced preliminary first-quarter sales of 79 trillion KRW and an operating profit of 6.6 trillion KRW. Sales increased by 4.2% compared to the previous quarter, and operating profit rose by 1.7%. These figures exceed the market consensus of 5.5 trillion KRW.

Researcher Kim Sun-woo of Meritz Securities analyzed, "Strong shipments in the smartphone division contributed to the overall performance improvement," and explained, "The business structure divided into sets and components worked complementarily, maintaining earnings despite stock price weakness caused by macroeconomic uncertainties."

The Galaxy S25 series' first-quarter shipments are estimated at approximately 13.5 million units, showing a favorable trend. Researcher Kim stated, "AI-centered marketing and stimulation of replacement demand were effective, but there was also a factor of early shipments to expand exports to the United States." He added, "In the second quarter, S25 sales are expected to decrease to below 8 million units, but the launch of the Galaxy S25 Edge (slim model) could act as an important variable in maintaining performance."

However, improvement in the semiconductor division's performance was limited. Researcher Kim explained, "In the semiconductor division, about 3.3 trillion KRW in profit was generated from memory, but losses of about 2.5 trillion KRW occurred in the LSI and foundry divisions, which held back overall results." He noted that the foundry division continues to operate at low utilization rates, resulting in a heavy fixed cost burden. He also diagnosed that HBM (High Bandwidth Memory) has not yet entered a recovery phase due to seasonal off-peak periods and delays in acquiring new customers.

Regarding second-quarter earnings, a conservative view was maintained. Researcher Kim predicted, "With no clear improvement expected in the semiconductor division, overall operating profit is likely to remain at the first-quarter level," and added, "Depending on the extent of the MX (mobile) division's earnings decline, overall performance could decrease compared to the previous quarter."

Nevertheless, the stock price is already considered to reflect low expectations. Researcher Kim stated, "Samsung Electronics' current stock price is 0.95 times the expected net asset value for 2025, approaching historical lows," and forecasted, "It could improve if various momentum factors come into play, such as entering a DRAM upcycle, acquiring new HBM customers, and launching new foldable products in the second half of the year."