Securities companies Samsung ‘buy stocks at the low point in May’ vs. 2Q profits plummeted by 99% compared to the previous year

Securities companies Samsung ‘buy stocks at the low point in May’ vs. 2Q profits plummeted by 99% compared to the previous year

As securities companies issued reports recommending Samsung Electronics stock purchases, the semiconductor bottom in May was continuously disseminated through the media, and Samsung Electro-Mechanics' operating profit in the second quarter was expected to drop by 99% compared to the previous year.

The low point in May was revealed as an economic stimulus policy at the National Assembly on May 21 by Deputy Prime Minister Choo Kyung-ho, saying, "After May, the deficit will improve, and in the fourth quarter, we will be able to see a completely different external performance."

FnGuide predicted that the average operating profit of Samsung Electronics for the second quarter of this year was 212.8 billion won, a 98.49 percent drop from the previous year, the worst quarter since the fourth quarter of 2008 during the financial crisis.
A report on the 2nd by Lim Hye-yoon, a researcher at Hanwha Investment & Securities, said, "The rebound in semiconductor exports continues. From March to May, the unit price and volume of semiconductor exports exceeded the level at the beginning of the year. In particular, in May, both unit price and volume improved compared to the previous month, and the semiconductor industry conditions improved. It suggests that we have passed the worst phase.”
The report continued, "Signs of recovery were confirmed in exports other than semiconductors such as cosmetics, secondary batteries, and steel. The unit price and volume of these items also improved compared to the previous month." It recorded the highest level since September. Export performance this time is positive in that signs of bottoming out have been confirmed. Exports are expected to pass the trough in the second quarter and turn positive in the fourth quarter compared to the same period last year." indicated by the rise of the economy.
In May, the market price of DRAM general-purpose products for PCs (DDR4 8Gb 1Gx8) fell to $1.4, less than half of the same period last year ($3.35).
The profit forecast of securities firms is that SK Hynix recorded a quarterly operating loss of 3,221.7 billion won in the second quarter, which is the third consecutive quarter of loss since the fourth quarter of last year.
Samsung and SK's semiconductor inventory increased by 31,948.1 billion won (Samsung Electronics) and 17,182.3 billion won (SK) as of the first quarter, and Samsung's increased by 13,152.8 billion won (69.9%) from a year ago (18,795.3 billion won). SK Hynix's inventory soared by 65.3% to 6,789.6 billion won over the past year.
According to Hanwha Investment & Securities’ report on Samsung stocks, “Korea’s May headline export growth rate announced on the 1st declined from April (-14.3%), but the daily average export (2.43 billion dollars, -9.3%) lasted two months. “By item, exports of semiconductors (-36.2%) were still sluggish, while exports of automobiles (+49.4%) continued to be good. Despite sluggish exports to China (-20.8%) and semiconductors in May, the trade balance reduced the deficit for the fourth consecutive month. In the market, the dominant evaluation is that Korea’s fundamentals are slow, but the direction of improvement is clear.”
The report continued, "The rebound in semiconductor exports continues. From March to May, the export unit price and volume of semiconductors exceeded the level at the beginning of the year. In particular, in May, both unit price and volume improved compared to the previous month, indicating that the semiconductor industry has passed the worst phase. suggests," he said.
In an answer to the National Assembly on May 21, Deputy Prime Minister Choo Kyung-ho said, "The trade deficit was the smallest in April, but it will not be good in May due to the base effect of last year." 40% of Korea's chip exports are concentrated in China, and chip makers Samsung Electronics and SK Hynix need US technology and equipment, and the US and China need semiconductor chips. The war is getting bigger.
An official from the US-China chip negotiations told Reuters, "The Korean side expressed the need for communication between working-level officials in all industries, not just semiconductors." On the 27th of last month, he announced at the Detroit Negotiation Center.

Bank of Korea Governor Lee Chang-yong said, "The growth rate is 1.1% in the scenario where China's economic recovery is delayed and financial unrest in advanced countries increases, and the growth rate is 1.6% in the scenario where China's growth engines are strengthened." It was announced on the 25th of last month at a press conference announcing the interest rate freeze.

<Lee Chang-yong, “China’s growth rate fluctuates by half in Korea, 1.8% growth is good excluding IT”, May 26, 2023>

<Refer to Korea’s crosshairs on the exclusion of workers’ participation in tariff reductions signed in the supply chain agreement, dated May 28, 2023>