By Yoon Ja-young
Staff Reporter

Samsung Electronics has split market investors into two opposing camps ― over the question of whether it can finally breach the 1-million-won per share threshold.

The country's biggest business, which led the recent rally on the Seoul bourse, took the spotlight as its market cap, which stands at around $110 billion, surpassed that of Intel for the first time on Sept. 22. Only a year ago, it was mere 60 percent of Intel in terms of market cap.

Samsung Electronics rose nearly 80 percent during the past year.

Behind the bullish run is the good performance of the country's global giant. Samsung marked a record-high 2.5-trillion-won operating profit in the second quarter despite the global financial crisis. Analysts say that Samsung made a leap forward as the global No. 1 by turning global crisis into an opportunity.

The good performance appears to be down to the weak Korean currency and continuous cost cut.

The upgrade of the Seoul bourse to developed market status by Financial Times Stock Exchange (FTSE) was also timely. Since Sept. 18 when FTSE announced the upgrade plan, foreigners bought 12.4 trillion won shares from the main market, of which 35 percent was Samsung Electronics shares.

The rise is also a result to dry-up of Samsung shares in the bourse. The company has been buying a trillion won of its own shares from the bourse each year to protect voting rights and sustain share prices.

Some analysts now expect Samsung to breach 1 million won per share. Among the optimists are Citi, IBK, Kiwoom and Woori, all having raised the target price of Samsung to above 1 million won.

They are mostly positive about the global semiconductor market. "Samsung is expected to reap 12.7 trillion won net profit next year, making 5.3-trillion-won profit in the semiconductor sector upon fast recovery of the market and its strong dominance there," said Lee Ka-keun, an analyst at IBK Investment & Securities. Citi pointed out a shortage of supply in the NAND flash market.

The possible upgrade of the Seoul bourse by the MSCI is also a boosting factor for Samsung Electronics. When foreign funds come to buy more shares from Seoul, Samsung, the biggest company in the country, is definitely going to take part of their portfolio. Analysts point out that foreign investors still have room to buy Samsung shares, considering that they make up only around a 47-percent stake in Samsung - it was nearly 60 percent back in April 2004.

The price is also still attractive for foreigners. Though they talk of breaching 1 million won here, it is still cheap in dollar terms. The Samsung Electronics share prices stands at around $680, lower than the $767 recorded on Jan. 31, 2006.

Some say, however, that there may be bubble in share prices.

The pessimists expect the performance of the IT industry overall to weaken after the fourth quarter, and add that global demand still has long way to go before a full recovery.

The strengthening of Korean currency is another threat to exporters like Samsung. "For Samsung shares to touch 1 million won, its net profit for the third quarter should be at least 4 trillion won, according to the ROE-PBR model," said Kim Sung-no, an analyst at KB Investment & Securities.

chizpizza@koreatimes.co.kr