Weaker Stock
The Samsung Electronics share price dipped below 1.2 million won (US$1,176) for the first time in two years, due mainly to concerns over the possibility that its operating profits for the third quarter of this year could fall to five trillion won or so. The bearish movement caused the Korea Composite Stock Price Index (KOSPI) to fall back to slightly over 2,050 points as well.
On September 2, Samsung Electronics lost 2.61 percent, or 32,000 won (US$31.39), from the previous session to close at 1.194 million won (US$1,171.41), with its earnings shock forecast to continue to the third quarter. “Assuming an operating profit estimate for Q3 of seven trillion won, the lower limit was 1.25 million won,” said HMC Investment & Securities Investment Strategy Team manager Lee Young-won, adding, “However, the profits are at around six trillion won now and the stock price is likely to fall for a while.”
According to FnGuide, Samsung Electronics’ business profits for Q3 are estimated at 6.9876 trillion won (US$6.8523 billion), 31.25 percent less when compared the same period last year. Under the circumstances, Woori Investment & Securities, Hyundai Securities, KDB Securities and Shinhan Investment Corporation lowered their consensus to below five trillion won.
“The Q3 smart phone sell-through is predicted to increase 7.0 percent from a quarter earlier to 80 million units,” Shinhan Investment Corporation research analyst Kim Young-chan mentioned, continuing, “Samsung’s profitability is likely to deteriorate due to competition with Chinese manufacturers like Xiaomi and Coolpad, and the subsequent increase in marketing expenses.”