Samsung Electronics: Is the IM-driven earnings surprise sustainable? We maintain BUY and our six-month-forward target price of KRW3,300,000 (the average of 10x 2018F EPS and 1.7x 2018F BPS) on Samsung Electroni
We maintain BUY and our six-month-forward target price of KRW3,300,000 (the average of 10x 2018F EPS and 1.7x 2018F BPS) on Samsung Electronics. Samsung announced preliminary 1Q18 revenue of KRW60tn and operating profit of KRW15.6tn. Revenue was 4.3% below our estimate but operating profit was a surprise, beating the forecast by 6.8% By division, semiconductor posted an estimated operating profit of KRW11.3tn, IM KRW3.7tn, display KRW0.2tn, and CE KRW0.46tn. The semiconductor division’s higher-than-expected operating profit was predictable because of DRAM price hikes across all types, but the earnings surprise reported by the IM division was even better than our already more optimistic view vs. the market average. The division’s shipment volume was modest, with 1,000 Galaxy S9s shipped and 78.8mn smartphones shipped; and efficient marketing execution signaled a margin improvement; however, we believe the higher-than-expected result has more to do with an increase in one-off gains. As for DRAM ASP in 1Q18, graphic DRAM ASP rose 12% QoQ, PC DRAM 7.9%, server DRAM 3%, and mobile DRAM 2.9%. Considering the declining yields of major DRAM manufacturers during 1X/1Y migrations, we expect the rise of DRAM ASP to persist into 3Q18.
Samsung Electronics is engaged in the manufacture and sale of electronic goods, communication products, semiconductors, telecommunication equipment, home appliances and other similar products. Co.'s products are mobile phones, MP3 Players, DVD players, video equipment, including Blu-Ray, TVs and VCRs; household appliances, including microwave ovens, refrigerators, home air conditioners, washing machines, ultrasonic humidifiers, dehumidifiers, vacuum cleaners and other small electrical goods; audio equipment, including semiconductors, information systems, and computers; miscellaneous parts; other products, including automatic vending machines, refrigerated display cases and electric tools.
Hyundai Motor Investment & Securities is the investment banking arm of the Hyundai Motor Group. The company offers stock brokerage and advisory services; derivative products brokerage and advisory services; wrap account portfolio management services; and VIP wealth management and tax planning, institutional equities, derivatives, and futures brokerage services, as well as sells investment and institutional products. It also provides equity offering, ABS, real estate PF and real estate PF securitization, offshore SOC, structured financing, asset securitization, real estate sales, IPO advisory, and private equity fund and fund management services; and CMA/RP portfolio management and fixed income based investments, as well as involved in the issuance, management, and brokerage of OTC derivatives. In addition, the company offers research services, including macro economic forecasts and stock market outlook, industry overviews and forecasts, fixed income strategies, corporate credit analysis, and valuation analysis. Further, it offers a range of retirement and pension services for individuals and corporate members; portfolios and asset allocation consulting and marketing services; proposing retirement pension plans; contract and payment management services; pension plan advisory and actuarial services; and system development and implementation services, as well as operates call centers for retirement pension services, etc.
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