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Samsung Electronics Co Ltd 005930

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Samsung’s Preliminary Numbers in Line; Reiterate our View That Memory Pricing Will Stabilize in 2H

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.

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Company Profile

Business Description

Samsung Electronics is a diversified electronics conglomerate that manufactures and sells a wide range of products, including smartphones, semiconductor chips, printers, home appliances, medical equipment, and telecom network equipment. About 52% of its profit is generated from semiconductor business, and a further 30%-35% is generated from its mobile handset business, although these percentages vary with the fortunes of each of these businesses. It is the largest smartphone and television manufacturer in the world, which helps provide a base demand for its component businesses, such as memory chips and displays, and is also the largest manufacturer of these globally.

129, Samsung-ro, Yeongtong-gu
Suwon-si, 443-742, Korea, Republic of
T +82 312001114
Sector Technology
Industry Consumer Electronics
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 111,683