[Click eStock] "Samsung Electronics: Most Concerns Priced In... Need to Prove Results"

On June 30, Shinhan Investment Corp. raised its target price for Samsung Electronics by 2.6% to 79,000 won, stating, "Most concerns have already been reflected in the stock price, but meaningful results still need to be demonstrated." The firm also maintained its "Buy" investment rating.

On this day, Kim Hyungtae, Senior Researcher at Shinhan Investment Corp., said, "We expect results to be weaker than our previous forecasts due to the impact of exchange rates, low foundry utilization rates, a gap in HBM (High Bandwidth Memory) orders, and sluggish NAND performance." However, he added, "There is still valid optimism that the rebound in memory prices, led by DRAM, will continue, and that HBM sales contributions will increase in the second half of the year."

The company projected second-quarter earnings of 75.64 trillion won in revenue and 6.06 trillion won in operating profit. Kim noted, "These figures are expected to fall short of the market consensus (76.81 trillion won in revenue and 6.81 trillion won in operating profit)." He further explained, "By business segment, we expect semiconductors (DS) to contribute 2.04 trillion won, mobile 2.58 trillion won, consumer electronics 430 billion won, display (SDC) 700 billion won, and Harman 310 billion won."

While memory shipment volumes and prices are generally in line with expectations, the average selling price (ASP) estimate for NAND was revised slightly downward. The foundry segment continues to post losses in excess of 2 trillion won, damaging profitability, while the mobile segment is inevitably experiencing negative growth year-on-year due to the impact of exchange rates and a slowdown in new product growth drivers.

Kim stated, "The current stock price is trading at a 12-month forward price-to-book ratio (PBR) of 0.96, which shows strong downside rigidity." He added, "If HBM sales are reflected in the second half of this year, profitability could improve. However, there is also a possibility that a box-range stock price trend could persist for an extended period due to delays in approvals from major clients." He continued, "In the second half, market attention will shift toward results in 1c DRAM and HBM4, and it is necessary to demonstrate meaningful achievements."