Samsung Electronics is expected to post 9 trillion won (US$7.47 billion) in operating profits in the fourth quarter. Its performance forecasts are improving, propelled by its semiconductor business.
On December 23, IBK Securities expected that Samsung Electronics’ operating profits in the fourth quarter would reach 8.7 trillion won (US$7.22 billion), and raised its target stock prices from 1.95 million won (US$1,618) to 2.1 million won (US$1,743). Hyundai Securities also said Samsung Electronics would see its operating profits record 8.5 trillion won (US$7.05 billion) and its target stock prices increase by 7 percent to 2.2 million won (US$1,826).
This month, major securities firms scrambled to raise Samsung Electronics’ operating profit forecasts. Kiwoom Securities improved the figures from 8.1 trillion won (US$6.72 billion) to 8.54 trillion won (US$7.09 billion), while HMC Investment Securities increase it by 10 percent to 8.7 trillion won (US$7.22 billion). These forecasts grew by a whopping 62.3 percent from 5.2 trillion won (US$4.32 billion) of operating profits which were decreased due to the discontinuation of the Galaxy Note 7 in the third quarter. These are also the biggest in three years after recording 10.4 trillion won (US$8.63 billion) in the third quarter of 2013.
The improvement in the semiconductor market conditions is one of the biggest factors contributing to the increase in Samsung Electronics’ stock prices. As the price and shipments of DRAM and NAND chips for computers are recently rising, Samsung Electronics’ device solutions (DS) business is expected to record some 4 trillion won (US$3.32 billion) in operating profits. Semiconductors are export products so the strong dollar will also have positive effects.
Market watchers said that Samsung Electronics would continuously be the biggest player in the market in 2017 as the company’s profit structure was recently improved. With Samsung bolstering its shareholder-friendly dividend policy, the market confidence has increased as well as stock price valuation. Kim Dong-won, analyst with Hyundai Securities, said, “Businesses in information technology (IT) will show profit growth next year and Samsung Electronics is expected to strengthen its electronic equipment business through the additional merger with Harman. Its profit structure will be improved a step further to more than 20 trillion won (US$16.6 billion) of annual operating profits.”