Samsung Preliminary 3Q
Samsung Electronics (005930.KS) announced preliminary 3Q guidance of 73t won ($61b US), up 14.7% q/q and 9.0% y/y/, with operation profit of 15.8t won ($13.2b US), up 25.7% q/q and up 27.9% y/y. Expectations for sales were between 73.5t won and 74.6t won, with operating profit expectations between 15.75t won and 16.1t won, which puts results in-line to slightly below consensus. While the company does not give details other than the above until the full release later this month, expectations are that strength came from the semiconductor segment, particularly DRAM, with currency on the positive side. While 3Q numbers were strong expectations are that it will be difficult for Samsung to maintain as much momentum in semiconductors as has been seen recently as CE demand has been weakening.
On a segment basis, expectations are that Samsung’s semiconductor segment generated between 9.7t won and 10t won of the 15.8t won operating profit, up 3t won from 2Q, and that the IM segment (IT/Mobile) generated 27t to 28t won in sales, up 4t to 5t won but ~3.6t won in operating profit, which assumes sequentially lower segment margins. Aggressive marketing for the foldable segment is expected to be the reason for the decline.
The stock itself peaked on the first day of the year and is down 19.48% to date despite the results this year and dropped slightly on today’s announcement, with sentiment leaning toward “the best is over”, the same sentiment that has been pressuring the stock for most of the year. Samsung has been facing problems with its mobile division, and while foldable devices are doing well, Samsung has been losing mobile share to Chinese brands. With global TV set sales slowing and notebook demand weakening a bit, that negative sentiment has only increased despite the best operating profit performance in over two years, but expectations for the company’s full report are for caution concerning semis, which will likely do little to remove the cloud over the stock.
On a segment basis, expectations are that Samsung’s semiconductor segment generated between 9.7t won and 10t won of the 15.8t won operating profit, up 3t won from 2Q, and that the IM segment (IT/Mobile) generated 27t to 28t won in sales, up 4t to 5t won but ~3.6t won in operating profit, which assumes sequentially lower segment margins. Aggressive marketing for the foldable segment is expected to be the reason for the decline.
The stock itself peaked on the first day of the year and is down 19.48% to date despite the results this year and dropped slightly on today’s announcement, with sentiment leaning toward “the best is over”, the same sentiment that has been pressuring the stock for most of the year. Samsung has been facing problems with its mobile division, and while foldable devices are doing well, Samsung has been losing mobile share to Chinese brands. With global TV set sales slowing and notebook demand weakening a bit, that negative sentiment has only increased despite the best operating profit performance in over two years, but expectations for the company’s full report are for caution concerning semis, which will likely do little to remove the cloud over the stock.
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