Samsung Expected to Record Strong Sales in 2H20
The author is an analyst of NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com. -- Ed.
Chinese handset shipments arrive sluggish in July; smartphone sales differentiate by region
July smartphone shipments in China proved more sluggish than expected. We attribute the lackluster results to strong demand in June stemming from the 618 shopping festival. Amid a rising gap in smartphone demand by region, SEC, which has a low China M/S and is currently benefiting from a variety of factors, should post strong sales in 2H20.
July smartphone shipments in China more sluggish than expected
In July, smartphone shipments in China totaled 21.26mn units (-35.5% y-y, -23.3% m-m), recording the biggest y-y decline since February. Amid the ongoing fallout from the Covid-19 crisis, July’s tepid data is primarily attributed to strong demand in June stemming from the 618 shopping festival, during which firms conducted large-scale promotional activities.
By brand, shipments of local Chinese brands reached 20.72mn units (-35.1% y-y, -24.0% m-m), while those of foreign brands (mostly Apple) came to 1.58mn units (-30.1% y-y, +17.1% m-m). We believe that sales at local brand players were weaker than those of Apple mainly due to the strength of local brands’ 618 shopping festival-related promotions.
While shipments of 5G smartphones amounted to 13.91mn units (-20.6% m-m), falling m-m, the portion of 5G smartphone shipments out of overall shipments widened to 65.4% (+2.2%p m-m).
Difference in smartphone demand by region is growing; SEC to benefit
Unlike China, the US, India, and Europe saw y-y sales growth in June. We expect smartphone sales to be relatively healthy in 2H20, backed by both the launch of new Apple products and the start of India’s traditional peak season.
Amid a rising gap in smartphone demand by region, Samsung Electronics (SEC), which has a low China M/S and is benefiting from both boycotts of Chinese products in India and US sanctions against Huawei in the US and Europe, is anticipated to record strong sales in 2H20.
With sales of the Galaxy Note 20 looking better than feared and SEC set to continue its cycle of new model launches (eg, the Galaxy Z Fold 2 and low/mid-end Galaxy models) in 2H20, related plays such as SEMCO, KH Vatec, and MCNEX stand out as likely beneficiaries.