Kiwoom Securities expects Samsung Electronics' 3Q operating profit to come in below its previous forecast, while HBM and foundry growth is expected to continue.
Kiwoom Securities lowered its outlook for Samsung Electronics' third-quarter results this year. The revision reflects its view that the impact of foreign exchange movements and the increase in generic DRAM prices will fall short of market expectations.
3Q revenue is forecast at KRW 198 trillion and operating profit at KRW 107 trillion, representing increases of 15% and 19%, respectively, from the previous quarter. However, both figures are expected to fall short of the previous forecasts of KRW 213 trillion in revenue and KRW 122 trillion in operating profit.
For the fourth quarter, revenue is forecast at KRW 200 trillion and operating profit at KRW 111 trillion, while the increases in DRAM and NAND prices are expected to remain at 3% and 12%, respectively, from the previous quarter.
HBM and foundry operations are expected to continue growing as anticipated. Profitability is expected to improve as HBM's sales mix exceeds 50%, while Exynos mass production is also expected to contribute to revenue.
The investment case for Samsung Electronics is expected to shift from rising generic memory prices to expanding market share in HBM and foundry operations, with a medium- to long-term buying approach recommended.