Samsung Electronics shares expected to extend gains

By Kang Seung-woo

Samsung Electronics share prices are expected to rise further on a strong earnings outlook, analysts said Monday.

“Samsung Electronics is forecast to make an operating profit of 10 trillion won ($8.9 billion) in the first quarter of the year, so its stock price has been adjusted to 2.72 million won per share from 2.33 million won,” said Kim Sun-woo, an analyst at Meritz Securities.

“Despite a weakening won, its businesses from memory chips to LCDs to smartphones are expected to come up with all-time high performances.

“Its improved earnings will help boost shareholder return.”

Kwak Hyun-soo, a researcher at Shinhan Investment and Securities, also said its stock price is likely to touch 2.5 million won.

“After reaching 2.3 million won, the Samsung stock may see a sharp decline. However, it will eventually hit the 2.5 million won mark,” he said.

“It has the potential to soar by more than 30 percent in the mid to long term.”

The forecast came as Samsung Electronics’ stock has continued to show a strong rally, hitting all-time highs in repetition on the back of expectations of an improvement in its corporate governance structure, strong demand for semiconductors and an upcoming launch of the Galaxy S8 smartphone.

It closed at 2.09 million won per share Monday.

The market capitalization of Samsung Group has increased by nearly 50 trillion won ($44 billion) this year thanks to Samsung Electronics’ share rally, according to the Korea Exchange.

The combined market values of 23 Samsung affiliates recorded 442.4 trillion won as of last Tuesday in comparison with 394.7 trillion won at the end of last year - a 12.1 percent gain.

It accounted for 28 percent of the total value of the benchmark KOSPI and the secondary, tech-savvy KOSDAQ, up from 26.1 percent three months ago.

Among the top 10 business groups in terms of market capitalization, Samsung’s increase of 47.6 trillion won also marked the highest gain, followed by SK Group’s 6.29 trillion won and LG Group’s 5.12 trillion won.

The increasing market capitalization is a huge success for Samsung whose heir apparent Lee Jae-yong is under arrest over his alleged involvement in the political corruption scandal that brought about the impeachment of President Park Geun-hye earlier this month. In addition, Samsung Electronics recently carried out a global recall of the Galaxy Note 7 whose batteries were prone to catching fire.

Hyundai Heavy Industries was ahead of Samsung in terms of growth rate as it posted 14.1 percent from 12.4 trillion won to 14.1 trillion won, compared with the latter’s 12.1 percent.

The three players out of the top 10 conglomerates - Hyundai Motor Group, Hanwha Group and Lotte Group - saw their market capitalization fall during the cited period - 1.2 percent for Hyundai, 0.5 percent for Hanwha and 0.2 percent for Lotte.

SK Group’s 21 affiliates saw their total market cap rise 7 percent to 96.5 trillion won. The combined market cap of LG Group’s 16 rose 6.9 percent to 79.8 trillion won during the same period.

The combined market value of the 10 largest business conglomerates climbed 8.1 percent to 823.8 trillion won, according to the data.