A Clear Sign of Recovery
Samsung Electronics' share price hit a 52-week high on Sept. 19, showing a clear sign of recovery. An increasing number of market experts say that the company's stock price can rise to the 50,000 won (US$42) range as uncertainties in the DRAM sector will be assuaged starting from the fourth quarter of this year and NAND prices continue to rise.
Samsung Electronics closed at 49,150 won (US$41.14) on the benchmark KOSPI market on Sept. 19, up 3.04 percent from the previous trading day, according to Korea Exchange (KRX). It is the highest figure in the one-year period. The company’s shares were traded at 43,250 won (US$36.17) earlier this month. On Sept. 18, it closed at 47,700 won, gaining 1.71 percent from the previous day.
As the price of Samsung Electronics shares recording a 52-week high, securities companies expect a full-fledged recovery in its stock price. NH Investment & Securities Co. maintained its “buy” opinion on Samsung Electronics and suggested a target price of 60,000 won (US$50.18) on Sept. 18. Do Hyun-woo, an analyst at NH Investment & Securities, said, “Consumers had an enthusiastic response to the Galaxy Fold at the recent IFA 2019. The foldable smartphone will gain momentum in 2020.”
KB Securities Co. paid attention to the decrease in DRAM inventory levels and the increase in NAND prices and raised Samsung Electronics’ target stock price to 56,000 won (US$46.83). Kim Dong-won, an analyst at KB Securities, said, “The decline in DRAM prices will slow down starting from the third quarter and the inventory level will drop 50 percent at the end of the fourth quarter compared to earlier this year. NAND inventory is expected to fall to the normal level in the fourth quarter, boosting their prices.”
Samsung Electronics is also forecast to gradually show improvement in performance, which was one of the main reasons for weak investor sentiment. The company’s sales and operating profit in the third quarter of this year are estimated at 60.41 trillion won (US$50.51 billion) and 6.96 trillion won (US$5.82 billion), respectively, down 7.72 percent and 60.42 percent from a year ago, according to financial data provider FnGuide.
Samsung Electronics is expected to see its sales increase 3.70 percent to 61.46 trillion won (US$51.39 billion) and its operating profit decrease 34.04 percent to 7.12 trillion won (US$5.96 billion) in the fourth quarter.
Uh Kyu-jin, an analyst at DB Financial Investment Co., said, “The company’s operating profit will continue an upward curve in the third and fourth quarters after reaching a low point in the first quarter. In particular, the decline in semiconductor prices will improve because of inventory reduction. Samsung Electronics will enter a full-fledged recovery next year based on improved profitability in the semiconductor sector. Its sales and operating profit are expected to reach 230.60 trillion won (US$192.81 billion) and 34.20 trillion won (US$28.60 billion), respectively next year.”