Samsung Electronics surpasses W2 mil.

Samsung Electronics stocks touched 2 million won Thursday, soaring to a record high. It is the first time the electronics giant which debuted on the stock market in 1975 surpassed 2 million won.

The world’s leading tech company started trading at 1.97 million won in the morning session, reaching 2 million won at 10:23 a.m.

Following strong earnings in the fourth quarter last year, a positive outlook that the company will mark record-high earnings this year on its booming semiconductor business has been pulling up the share prices.

The company announced last Tuesday that its fourth-quarter sales totaled 53.3 trillion won, its operating profit standing at 9.2 trillion won. This is the first time its quarterly operating profit surpassed 9 trillion won since the third quarter of 2013 when its operating profit marked 10.2 trillion won.

Samsung Electronics briefly stopped its rally on the bourse following an investigation of its vice chairman Lee Jae-yong by the special prosecution, but soon gained back its upward momentum.

Securities companies have also been raising target prices for Samsung Electronics.

KB Securities, for instance, pulled up the target price for the tech giant to 2.4 million won from 2.2 million won. Hana Financial Investment which had suggested 1.95 million won also raised the target price to 2.3 million won.

Kim Roko, an analyst at Hana Financial Investment, expected Samsung Electronics’ operating profit to grow 29 percent year-on-year to mark 8.64 trillion won in the first quarter, while sales will contract by 3 percent year-on-year and by 9 percent from the previous quarter.

“Due to seasonal factors, it is likely to see a sales decrease in all business divisions from the previous quarter,” Kim said. “The IT and mobile communications (IM) division will likely see declining profit due to the decreasing ratio of high-end devices in the absence of the Galaxy S series, but the increasing sales of its low-priced lineup will partly make up for it.”

While the first quarter will see earnings decline as it is a slow season, Park Kang-ho, an analyst at Daishin Securities, said the fundamentals will remain solid on improving semiconductors and displays.

“DRAM prices rose higher than market expectation. We all know the semiconductor market is good, but it is even better than what the market has expected,” he said.

“Most of all, the market expects the earnings for the second and third quarters to mark record highs,” he said, which means the annual earnings are also likely to be the biggest ever.

Kim also expected Samsung’s operating profit for 2017 to stand at 41.1 trillion won, up 30 percent from the previous estimate. “It means the operating profit will increase by 41 percent from the previous year. In semiconductors and displays, Samsung will continue enjoying high profitability thanks to its differentiated technology.”

Regarding the IM division, he pointed out volatility remains there depending on the success of the Galaxy S8. “However, improving profitability of the low-priced lineup is likely to make up for the fall.”

Analysts also positively evaluate Samsung Electronics’ policy to return profit to shareholders. The company announced its plan to give around 3.8 trillion won in dividends to shareholders, while buying back its shares.

“Samsung Electronics will be buying back 9.3 trillion won of its own shares, which is definitely positive for the stock prices,” Kim said.

Park said Samsung Electronics is likely to head upward. “Even after surpassing 2 million won, it won’t see a steep revision in the share prices though it may become stagnant. It is still heading way up.” (Yoon Ja-young, The Korea Times)