Samsung’s Preliminary Numbers Imply Memory Headwinds in 2019

Downside to its Shares Is Limited

Kazunori Ito 08.01.2019 | 12.26
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Samsung Electronics’ preliminary result for the December quarter was weaker than anticipated, suggesting there will be headwinds to the memory business in first-half 2019. Revenue of KRW 59 trillion and operating income of KRW 10.8 trillion for December quarter are below our forecast of KRW 64 trillion and KRW 14.5 trillion, respectively. However, we consider that the numbers are within the market’s latest expectations, as: 1) Samsung’s preliminary results are in line with Micron’s November quarter numbers and the weak guidance for February quarter, which were disclosed recently; and 2) the slowdown in South Korea’s semiconductor exports and downward revision on Apple’s revenue guidance had implied weaker-than-expected iPhone demand. Overall, we continue to believe that downside for Samsung’s shares is limited, as its current dividend yield of 3.8% should be attractive for investors.

While we plan to trim our forecast numbers after the segment breakdown is disclosed later this month, we retain our view that supply-demand balance will recover in second-half 2019 as we believe that suppliers will proactively cut memory production to avoid intense price competition, and that in the longer term, robust growth of data traffic will continue to drive memory demand. Therefore, we do not expect to make a substantial change to our fair value estimate, which is based on our long-term forecasts.

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Verdipapirer nevnt i artikkel

Navn på verdipapirPrisEndring (%)Morningstar Rating
Samsung Electronics Co Ltd65 500,00 KRW0,00Rating
Samsung Electronics Co Ltd GDR1 436,00 USD-2,91Rating

Om forfatteren

Kazunori Ito  er senior aksjeanalytiker hos Morningstar.

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