Analyst Note| Kazunori Ito |
Samsung Electronics’ December quarter preliminary numbers were broadly in line with our expectation, excluding a onetime factor. Revenue guidance of KRW 76 trillion is 2.7% up sequentially, which is close to our forecast of KRW 76.9 trillion. Operating income guidance of KRW 13.8 trillion is 12.8% down from the previous quarter and below our expectation of KRW 15.2 trillion. Although detail is not provided, the company revealed that the operating income guidance includes the loss from the special bonus paid to employees. Given the impact of the previous special bonus paid in 2013 of KRW 0.8 trillion, we estimate that the special bonus explains most of the divergence between our forecast and the guidance, and Samsung’s fundamentals in the quarter would likely otherwise have been in line with our expectations. Hence, we retain our earnings forecasts as well as our fair value estimate of KRW 74,000.