Published : Aug. 18, 2016 - 16:58
Samsung Electronics’ Samsung Electronics shares soared to an all-time high Thursday on expectations of the better performance of the Korean electronics giant for the rest of the year, not only in smartphones, but also in chips and display panels.
The shares closed at 1.64 million won ($1,481) apiece on Seoul’s main stock exchange, up 4.73 percent from the previous day. It was the highest closing price for the stock since Jan. 3, 2013 when it recorded 1,576,000 won.
The market bellwether opened higher and rallied to 1,605,000 won at around 11:30 a.m., setting a new intraday record since it was listed. Foreigners led the rally, but in later trading it was institutional investors who buttressed the stocks in spite of foreign profit-taking. Thursday’s rally added 10 trillion won to Samsung Electronics’ market value to reach 232.3 trillion won. The benchmark Kospi rose to 2,055.47 points on Samsung’s gains.
A strong earnings outlook was behind the high-flying stock prices of Samsung Electronics, analysts said.
The world’s largest producer of smartphones has beaten earnings forecasts two quarters in a row this year and is expected to continue the strong performance in the coming quarters, they said.
Samsung reported an operating profit of 8.1 trillion won in the April-June period, its best quarterly performance since the first quarter of 2014.
Analysts say the firm will likely see its annual sales surpass 200 trillion won and its operating profit 30 billion won in 2016.
According to FnGuide, a local financial data provider, the market consensus on its annual sales is 206.4 trillion won and 30.5 trillion won on its operating profit.
“The stock rally will continue as the semiconductor and display units of Samsung Electronics are expected to fare well in the second half of the year,” said Lee Seung-woo, an analyst at IBK Investment & Securities. “The new Samsung Galaxy Note 7 unveiled earlier this month will also add to the rally.”
The analyst raised the target price from 1.73 million won to 1.8 million won.
“Samsung will continue operating profits of over 8 trillion won in the third and fourth quarters,” said Park Ki-bum, an analyst at BNK Securities. “The company’s annual earnings is estimated to jump 17.4 percent in 2016 compared to last year, and even more next year.”
Park raised his target price from 1.7 million won to 1.82 million won.
Some even bet on the stock price reaching 2 million won.
“Sales of the Galaxy Note 7, memory chips and OLED (Organic light-emitting diode) products would give Samsung an absolute competitive edge, boosting its stocks to near 2 million won,” said So Hyun-cheol, an analyst at Shinhan Investment Corp.
Samsung Electronics’ financial affiliate companies also saw their stocks advance Thursday, on news of intragroup stock transactions that many saw as a step toward realigning the group’s corporate governance.
Samsung Life Insurance decided to purchase a 9 percent stake in Samsung Fire & Marine Insurance, held by the latter as treasury stocks, at a board meeting held after the market close. It also decided to purchase shares in the brokerage affiliate Samsung Securities.
Samsung Life has been upping its stakes in the group’s other financial companies, in what market watchers see as part of the group’s preparations to shift to a holding company structure.
The life insurer owns a 71.86 percent stake in Samsung Card following its purchase in January of entire Card shares owned by the electronics unit.
Samsung Life’s share price closed at 108,000 won, after hitting a new midday high of 109,500 won.
By Song Su-hyun (
song@heraldcorp.com)