Instant view: Samsung Elec swings to Q4 profit on strong chips

SEOUL (BestGrowthStock) – Samsung Electronics, the world’s top maker of memory chips and LCD screens, swung to a quarterly operating profit as the tech sector recovery boosted chip prices and shoppers snapped up TVs and mobile phones.

Samsung reported on Friday a 3.7 trillion won ($3.2 billion) operating profit in the fourth quarter to December, beating a consensus forecast for a 3.58 trillion won profit from Thomson Reuters I/B/E/S.

WON SANG-PHIL, MARKET ANALYST, TONG YANG SECURITIES

“Semiconductors will drive Samsung’s earnings this year…consumer fever for Apple’s iPhone and new tablet product is likely to help Samsung’s chip business.”

“LCD’s contribution to operating profit is not expected to be as high, since the market has entered limitless competition. The chip business will have to offset weak LCD performance for a while. However, Samsung’s display line-ups have maintained their lead in quality over Taiwanese competitors. Samsung is likely to win this game of chicken as it did in the semiconductor market.”

“Mobile remains the largest concern. Apple has been hitting the smartphone market hard. Samsung’s new smartphones are going to come out in the third quarter but whether it can beat the market leader is questionable.”

“The won has not been affecting Samsung’s earnings so much. Sales are more important to the company, unless the won rises to a three-digit level against the dollar, which is highly unlikely.”

LEE MIN-HEE, ANALYST, DONGBU SECURITIES

“The focus this year will be an expected rise in supply across the product line that will likely start in the second half because companies here in Korea and abroad are expanding production in anticipation of recovering demand.

“The won will be much stronger than a year earlier in terms of the average value even if it stays at the current level this year, but this won’t be a big drag on Samsung’s overall performance.”

“Its quarterly profit will likely maintain around the 4 trillion won level in the first half but will shrink to about 3 trillion won in the second half due to various factors including the growing supply and competition.”

SONG JONG-HO, TECHNOLOGY RESEARCH HEAD, DAEWOO SECURITIES

“We see Samsung Electronics continuing to post firm earnings growth this year, helped in particular by earnings growth in the memory chip sector.”

“DRAM chip pricing and sales will continue to grow, while NAND flash will also do very well, fueled by robust demand from smartphone makers.”

“Samsung will retain its leadership in the TV business, as it has done very well in LED TV, although Japanese rivals are catching up fast. It will focus on producing LED screens that are thinner than current lineups.

“The strengthening won may cause some concern in terms of sentiment toward shares, but only a limited amount.”

“Some foreign investors I have been talking to say if Samsung Electronics shares fall due to the stronger won, they will take it as an opportunity to buy them more cheaply.

“If the won falls below 1,000 per dollar however, sentiment toward shares may be visibly hurt.”

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(Reporting by Rhee So-eui, Jungyoun Park, Yoo Choonsik and Shin Ji-eun; Editing by Jonathan Hopfner)

Instant view: Samsung Elec swings to Q4 profit on strong chips