Monday, September 18, 2017
Samsung Electronics is forecast to post another record operating profit in the third quarter of the year amid a continued chip boom, according to local brokerages, Sunday.
Projections are beating earlier marketing expectations that the Korean tech giant is likely to see its figure go down in the July-to-September period after hitting an all-time high of 14.07 trillion won ($12.4 billion) in the second quarter.
"Samsung will record its highest-ever financial results in the third quarter -- an operating profit of 14.5 trillion won on sales of 62 trillion won," Shinhan Investment analyst Choi Do-yeon said.
Kiwoom Securities analyst Pak Yu-ak said, "The operating profit will be 15 trillion won on sales of 59.7 trillion won in the upcoming quarter."
Eugene Investment and Securities and KB Investment and Securities also estimate the Seoul-based company's operating profit would top 14.1 trillion won.
The promising prospect for Samsung is based on strong performance of its semiconductor unit that chalked up 8.03 trillion won in the previous quarter amid the memory chip "super cycle."
Unlike initial concerns, the price for memory chips has been surging thus far.
According to Eugene Investment and Securities, the price for a 1GB DRAM semiconductor rose from $4.6 in the fourth quarter of 2016 to $6.4 in the third quarter of 2017. That of a 1GB NAND chip also grew from $0.26 to $0.28 during the same period. The hike is expected to continue during the latter half.
"Its chip business' operating profit is likely to advance to 9.9 trillion won," Eugene Investment and Securities analyst Lee Seung-woo said.
"Samsung's overwhelming competitiveness in chips and displays has made it irreplaceable in each sector."
KB analysts Kim Dong-won also said, "The operating profit from the chip business is expected to post 9.8 trillion won thanks to surging prices for DRAM and NAND flash memory."
DRAM is a significant part for desktop computers while NAND is the building block for mobile devices such as smartphones.
Amid the strong outlook for the third quarter, Samsung's stock price that declined to 2.21 million won earlier this month has bounced back. It was up 0.2 percent to close at 2,521,000 won, Friday.
Brokerages also forecast that Samsung's record-setting streak will continue in the final quarter of the year, with its operating profit projected to surpass 16 trillion won for the first time in history.
"The fourth-quarter operating profit is expected to reach 16.4 trillion won -- 11.5 trillion won from the chip business," Pak said, adding the revenue will amount to 65.2 trillion won. "The market is worried about the odds of a peak-out in chip prices, but prices for DRAM and NAND are likely to remain strong."
Shinhan's Choi also expects that Samsung will see all its divisions deliver earnings performances in the October-to-December period.
"The release of the Galaxy Note 8, shipments of flexible organic light emitting diode (OLED) displays as well as the continued chip boom will lead Samsung to earn revenue of 70.3 trillion won and an operating profit of 16.6 trillion won," he said.
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