By Kim Yoo-chul
While Samsung Electronics is experiencing a steep correction in its stock prices due to concerns from investors about the firm’s heavy reliance on smartphones, an asset manager said that such worries are “exaggerated.”
“The movement of a stock price reflects a firm’s earnings performance. In Samsung’s case, its profit is forecast to grow 10 percent next year from this year’s estimated 40 trillion won,” Kim Il-tae, senior fund manager at Taurus Investment Management told The Korea Times Sunday.
“In that sense, Samsung’s shares will rise. Samsung is far better than Apple in parts-outsourcing, cost-cut management and product offerings.”
In addition, a recovery of Samsung’s component business is helping the firm offset any negative impact resulting from a cut in margins in smartphones, he said.
The manager, who is investing millions of dollars in Samsung stock, said smartphone sales growth will slow, and that Samsung can’t avoid this trend.
However, he stressed that a “mobile evolution” will take place over the next few years, spurring demand for connected devices in emerging markets.
Samsung’s smartphone product offering is very diversified across price tiers and within the high-end segment.
Given that high-end smartphones generate the majority of smartphone operating profit, the world’s biggest smartphone manufacturer won’t suffer from a significant operating margin dilution, analysts say.
Data from Strategy Analytics (SA), a Boston-based consulting firm, showed Apple’s global share by the end of the second quarter was the lowest in three years just having 13.6 percent from 16.6 percent that it had a year ago, while Samsung had a 33.1 percent global market share from 31.1 percent last year.
“The report means that worries over market saturation are overblown. The current ‘mobile revolution,' meaning transition from design-focused feature phones to smartphones, is a new big wave that is well-compared to the Internet revolution decades ago as we see new lifestyle patterns thanks to the rise of such connected devices,” said Kim at Taurus.
He expects the market for smartphones in emerging countries such as China, India and in the Southeast Asian region to rise over 30 percent this year from the previous year.
“The penetration ratio in smartphones in Europe reached over 80 percent. But that rate was less than 50 percent. There is more room for further growth. ‘A rise of budget smatphones in emerging markets’ will become the trend this year. In that perception, Samsung is better positioned than Apple. Apple is limited in product offerings,” said the manager.