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    A005930   KR7005930003

SAMSUNG ELECTRONICS CO., LTD.

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Samsung Electronics : says Q1 profit likely rose 44%, matching expectations

04/07/2021 | 10:00am EDT
FILE PHOTO: The logo of Samsung Electronics is seen at its headquarters in Seoul

SEOUL (Reuters) - Samsung Electronics Co Ltd on Wednesday said first-quarter profit likely rose 44%, with analysts attributing the surge to brisk sales of smartphones and TVs, albeit tempered by a likely fall in chip earnings after a storm halted U.S. output.

The South Korean technology giant forecast January-March operating profit of 9.3 trillion won ($8.32 billion), matching a weighted average analyst forecast from Refinitiv SmartEstimate.

Analysts said Samsung's mobile division likely saw operating profit soar more than 1 trillion won to about 4.15 trillion won after its flagship Galaxy S21 smartphone series outsold the previous version by a two-to-one margin in the six weeks since its January launch, according to research provider Counterpoint.

A lower starting price for the flagship helped sales for the world's largest smartphone maker during the quarter, with the S21 priced $200 lower than the S20, Counterpoint said.

Profit in Samsung's television set and home appliance business also likely more than doubled to around 1 trillion won, analysts said, due to continued stay-at-home demand.

Cross-town TV and home appliance rival LG Electronics on Wednesday announced its largest-ever preliminary quarterly operating profit of 1.5 trillion won for January-March.

In Samsung's chip division, analysts said profit likely fell 20% to 3.6 trillion won due to the cost of ramping up domestic production as well as losses at its Texas plant following a mid-February stoppage, blunting the benefits of strong demand.

U.S. memory chip peer Micron Technology Inc last month forecast third-quarter revenue above analyst estimates due to rising demand brought about by a global shift to remote work.

The price of DRAM chips widely used in laptops and other computing devices rose 5.3% in January-March from the previous three months, showed data from TrendForce. Analysts expect that trend to continue as a global chip shortage spurs on buyers to snap up supplies.

"Prices are likely to rise further in the current quarter due to solid demand for servers," said analyst Park Sung-soon at Cape Investment & Securities.

CHIP INTEREST

When Samsung announces detailed earnings later this month, "there will be interest in finding out how much Samsung is struggling in terms of low yields in its non-memory business, in addition to the extent of the losses in Texas and the U.S. pressure to increase chip investment," Park said, referring to the number of non-memory chips that pass quality tests.

Analysts have estimated that Samsung will invest about 10 trillion won in its chip contract manufacturing business this year, compared to about 6 trillion won last year.

Two top White House aides are set to host a meeting on April 12 with chipmakers and automakers in attendance on the state of the U.S. supply chain, Reuters previously reported. Samsung is considering a new $17 billion chip plant in the United States.

Samsung also said, in a preliminary earnings release without offering any breakdown of the figures, that revenue likely rose 17% from the same period a year prior to 65 trillion won.

Its share price traded down 0.2% after the release versus a 0.2% rise in the benchmark KOSPI. The stock has risen about 6.2% so far this year versus the KOSPI's 8.8%.

($1 = 1,118.2100 won)

(Reporting by Joyce Lee and Heekyong Yang; Editing by Christopher Cushing)

By Joyce Lee and Heekyong Yang


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
KOSPI COMPOSITE INDEX 0.60% 3219.71 Real-time Quote.11.49%
SAMSUNG ELECTRONICS CO., LTD. 0.72% 83900 End-of-day quote.3.58%
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Financials
Sales 2021 267 367 B 240 B 240 B
Net income 2021 35 917 B 32,2 B 32,2 B
Net cash 2021 99 452 B 89,2 B 89,2 B
P/E ratio 2021 15,3x
Yield 2021 1,72%
Capitalization 563 075 B 504 B 505 B
EV / Sales 2021 1,73x
EV / Sales 2022 1,50x
Nbr of Employees -
Free-Float 82,9%
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Mean consensus BUY
Number of Analysts 37
Average target price 106 594,59 KRW
Last Close Price 83 900,00 KRW
Spread / Highest target 54,9%
Spread / Average Target 27,0%
Spread / Lowest Target -10,6%
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Managers and Directors
NameTitle
Hyun-Suk Kim Co-President, Co-CEO & Director
Dongjin Koh Co-President, Co-CEO & Director
Kinam Kim President, Co-CEO & Director
Tae Moon Roh Co-President & Head-Research & Development
Hee-Chan Roh Chief Financial Officer
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