Samsung Electronics - Time for Legacy Is Coming

[NH/RYU YOUNGHO] Samsung Electronics Co., Ltd

■ Samsung Electronics - Time for Legacy Is Coming

- Maintaining a buying opinion on Samsung Electronics, the company raised its target price to 120,000 won from 100,000 won. Specific data and results can be updated after the earnings announcement on July 31, but even considering the large-scale reversal, the company has achieved better-than-expected results. As the strength of semiconductor cycle beneficiaries and the possibility of entering HBM are increasing toward the second half of the year, it is expected that the discount factors received so far will eventually be resolved. In particular, the company's increasing attractiveness, which has a mass advantage, is also expected to increase. Recommend an increase in weight

- Samsung Electronics' provisional performance in the second quarter recorded 74.0 trillion won (+23.3% y-y, +2.9% q-q) and its operating profit recorded 10.4 trillion won (+1,455.6% y-y, +57.4% q-q). Sales were at the level of market expectations, but operating profit significantly exceeded recently upgraded market expectations. Positive performance than expected is due to 1) exchange rate impact 2) sales unit price increase due to SDC customers' new product launch 3) inventory valuation loss due to rising memory sales prices. The operating profit for each division is estimated to be DS 6.4 trillion won, SDC 0.9 trillion won, CE 0.6 trillion won, Harman 0.2 trillion won, and MX 2.3 trillion won. In particular, DS and SDC sectors are more positive than the company expected

- In the second quarter, Bit Growth is estimated to have recorded +5% and -2% for DRAM and NAND, respectively. Unit price is estimated to have risen by +17% for DRAM and +18% for NAND. The reversal of inventory losses due to rising memory prices is estimated to be reflected in the mid-1 trillion won range. MX is expected to suffer from sluggish profitability due to cost burden. SDC is offset by seasonal offset by launch of new products from customers. In particular, the launch of new tablets by customers is driving the overall market price increase of SDC

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