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Samsung shares recover luster

Last year is considered a bottoming out of semiconductor market

Jan 14,2020
Samsung Electronics’ shares hit a new record closing price Monday, 60,000 won ($51.92) per share, raising expectations of a continued bull run thanks to growing optimism over the global semiconductor market.

Last Thursday, Samsung shares closed at 57,600 won, a record for the 45 years since they were first publicly traded on the Korean stock market, and the following day a new record was set: 59,500 won. On Monday, shares added 500 won, or rose 0.84 percent, from Friday.

Samsung Electronics shares split in May 2018 at a ratio of 50 to 1 after they were trading for around 2.5 million won each.

The recent bull rally was largely driven by foreign investors, who have net purchased more than 600 billion won so far this month.

The recent rally has had some retail investors question their investment judgments.

Kim Young-jin, 37, felt bitter looking at a stock chart showing Samsung shares breaking records. Kim bought 9 million won worth of Samsung shares for 46,000 won on Feb. 4, 2019 and sold them all last November at a price of 53,200 won.

He thought they had reached their peak.

“I didn’t know it would continue to go up,” Kim said. “I’m wondering if I should jump in again.”

On Wednesday, the median target price of estimates by 15 brokerages for Samsung Electronics was around 68,000 won per share.

NH Investment & Securities had the highest target price of 74,000 won. Hana Financial Investment’s 63,000 won was the lowest among the 15 firms, although it was still 6 percent higher than the current price.

“It is still not too late to buy - there is plenty of room for the price to surge,” Song Myung-seop, a researcher at HI Investment & Securities, said.

The logic for such an optimistic outlook is that fourth quarter earnings hit bottom and should rebound in the future.

Samsung Electronics estimated its operating profit for last year’s fourth quarter at 7.1 trillion won on Wednesday, which surpassed market expectations of 6.5 trillion won. With signs of recovery in the sluggish semiconductor industry, Samsung’s operating profit is expected to reach 39 trillion won this year, which is roughly 40 percent higher than last year’s.

5G wireless technology will dominate the global telecommunications industry this year, and as people trade in smartphones for 5G models, demand for semiconductors will increase. Samsung’s own technological innovations will also help. “Foldable smartphones will contribute to the firm’s profit,” said Park Won-jae, a researcher at Mirae Asset Daewoo.

The recovery of DRAM prices is also a positive sign. Noh Geun-chang, a senior analyst at HMC Securities, said “the price of Server DRAM is expected to raise 1 percent this month compared to last month, and will raise 1 percent each month.”

But there are some risks also on the horizon.

“Although U.S.-China trade tensions have eased, there remains uncertainty,” Cho Yong-jun, head of the Hana Financial Investment Research Center said. “Be wary of excessive optimism since unexpected variables may appear.”

BY HWANG EUI-YOUNG, KIM YEON-AH [kim.yeonah@joongang.co.kr]


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