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By Lee Min-hyung
Korea’s major semiconductor stocks remain sluggish despite solid earnings, due to their relatively weak performance in the non-memory chip business, analysts said.
However, they expect chip stocks to bounce back in the second half of this year, citing further earnings growth in the coming quarters.
Samsung Electronics and SK hynix are two of the nation’s largest companies by market capitalization. Their major cash cow is memory chip sales, which have driven their robust second-quarter earnings.
In a preliminary earnings report, Samsung Electronics achieved 12.5 trillion won ($10.96 billion) in operating profit during the April-June period, up 53.4 percent from the previous year, riding on the so-called semiconductor chip super-cycle, thanks to heavy chip demand. The quarterly earnings were the highest since the third quarter of 2018.
But as the earnings were heavily reliant on the sales of memory chips ― such as DRAM and NAND flash semiconductors ― Samsung’s stock price has failed to achieve a meaningful rebound, according to market experts.
The stock price of Samsung Electronics reached a record high of 96,800 won in Jan. 11 this year, but it has been on a downward curve to around the 80,000-won mark as of Friday.
SK hynix stock has also shown a similar pattern after the chipmaker’s share price set a new high of 150,000 won in early March. SK hynix shares have since fallen to the range of between 120,000 won and 125,000 won in July.
Market analysts said the chipmakers need to find new growth momentum in the non-memory sector in order to achieve outstanding stock growth.
“Samsung Electronics needs dramatic events to occur, either by securing additional fabless clients in the United States or pushing for mergers and acquisitions in the non-memory sector, in order for it to find meaningful stock price growth,” Hana Financial Investment analyst Kim Kyung-min said.
Hanwha Investment & Securities analyst Lee Soon-hak said that Samsung’s stock price, however, would gradually bounce back in the second half of this year.
“The earnings upside of Samsung’s chips and IT & mobile division will enable the company to achieve 15 trillion won in operating profit in the third quarter,” he said. “This earnings growth and increased valuation will help the chipmaker recover its stock price.”
Chip stocks sluggish despite solid earnings
Source: Buhay Kapa PH
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