“If this continues, even the market capitalization of 300 trillion won will be broken… The scary ‘Samsung Electronics crisis theory’

Vice Chairman Jong-hee Han gives a commemorative speech at a ceremony celebrating the 55th anniversary of the founding of Samsung Electronics held at Samsung Electronics Suwon Digital City on the 1st. /Photo = Provided by Samsung Electronics

“We will first take a close look at management to see if our competitive spirit and urgency have weakened as a result of complacency with past achievements.” (last 1 day Samsung electronics 55th Anniversary Service)

The management of Samsung Electronics once again issued a reflection statement. Previously, Young-Hyeon Jeon, head of the Device Solutions (DS) division (Vice Chairman), made his first public apology by announcing temporary poor performance for the third quarter, and Vice Chairman Jong-Hee Han, CEO , voice too. self-reflection at the ceremony celebrating the company’s 55 years. It seems that the ‘crisis theory Samsung Electronics’ that is spreading in the market has reached the management.

The stock price could not exceed ‘50,000’ based on the closing price for 15 days. This is despite the fact that Samsung Electronics has specifically announced in a conference call the ability to provide HBM3E 8-layer products to major customers in the fourth quarter of this year. Experts in Yeouido are also taking a cautious stance. The analysis is that the priority is to determine the performance of high bandwidth memory (HBM) in the future.

On the 1st, the stock price of Samsung Electronics closed at 58,300 won, down 900 won (1.52%) from the previous trading day. The stock price peaked on July 11 (intraday price won 88,800) and fell more than 34% until today. This is a significant decline because the KOSPI index, which is linked to the stock price of Samsung Electronics, a major stock, fell by about 12% during this period. From the market capitalization (KRW 522.953 trillion) based on the closing price on July 11, about KRW 175 trillion has evaporated in about four months.

The historical trend of ‘self-interest’ of foreigners was obvious. Foreigners have been net selling since September 3, but turned to buying after 34 trading days on the 28th of last month. However, the buying trend lasted until the next day. For three consecutive days from the 29th of last month to the 1st of this month, foreigners registered a selling gain.

Investor anxiety is growing. In an online stock discussion room, a Samsung Electronics shareholder said, “If this continues, won’t Samsung Electronics’ market capitalization of 300 trillion fall? won’t fall, but the ‘Samsung Electronics crisis theory’ sounds scarier than ever.” . Another shareholder also wrote, “Instead of getting closer to 60,000 Electronics, we’re moving further away. Please increase the purchase of shares by high-ranking executives and consider measures to increase the stock price. I can’t sleep because I’m afraid if we continue like this, we will be pushed down to 40,000 Electronics.” .

Samsung Electronics Seocho headquarters. /Photo=Reporter Shin Min-kyung The biggest factor in Samsung Electronics’ sluggish stock price is thought to be the ‘earnings shock’ in the third quarter. The decline in profits in the device solutions (DS) segment, a semiconductor industry, is said to have been the cause of the decline in company performance. Samsung Electronics’ operating profit for the third quarter of this year, announced the day before, was KRW 9.1834 trillion. According to the financial information company FnGuide, the operating profit consensus (average forecasts of securities companies) for the third quarter before provisional results were announced on the 8th of last month was KRW 10.7717 trillion. In particular, the operating profit of the DS division was 3.86 trillion won, falling below the already low market expectations (around 4.2 trillion won). This is why the ‘Samsung Electronics crisis theory’ arose.

Meanwhile, to reverse the worsening situation, Samsung Electronics executives, regardless of age and status, are buying back their own shares. Usually, the purchase of stock by company executives is read as a sign that the stock price is going down and is considered good news.

According to the Financial Research Service, Kim Won-kyung, CEO of Global Public Affair, bought 1,000 shares of the company’s stock for a total of 57.5 million won on the 24th of last month (based on date the contract). The next day, Vice President Kim Dong-wook also bought 1,300 shares of the company’s stock on the market for a total of 72.93 million won. Choi Kyung-sik, president of North America, bought 4,000 shares at 58,000 won per share on the 22nd of the same month. The acquisition amount is 232 million won. Including these people, 19 operators bought financial stocks worth tens of millions or hundreds of millions won in the past month alone.

Will the stock price be able to break out of the ‘50,000 range’ and take the upward trend? The stock market is ‘partly optimistic’. The fact that Samsung Electronics uniquely mentioned the possibility of providing HBM3E 8-layer products to major customers in the fourth quarter in this earnings conference call is considered positive. However, according to their analysis, the key is how much Samsung Electronics will reduce the gap with its competitors during the slowdown in the memory industry next year.

Kim Gwang-jin, a researcher at Hanwha Investment & Securities, said, “It is still too early to make optimistic judgments because there is still a gap with competitors in the time of market entry for next-generation products such as 12 products – cover. and HBM4.” “It’s not enough,” he said.

As valuation attractiveness (stock price relative to performance) has increased, some expect an increase in stock prices. Choi Bo-young, a researcher at Kyobo Securities, said, “Recently, the company’s stock price is at the bottom of the valuation range and is testing the bottom due to changes to overcome negative factors. ” in the future through improvements in core die performance, access to the high end market of HBM products, and development of the refinery segment “We expect the stock price to recover,” he said.

Kim Seon-woo, a researcher at Meritz Securities, said, “In a situation where there are widespread concerns about artificial intelligence (AI) investment and the continuation of memory development, the company expressed its rational investment will. “He said, “DRAM The business situation will continue to improve until the end of next year, and HBM “The preparation of customer orientation has been completed, and only the last test hurdle remains,” said e. He said, “If HBM’s ordered materials and quarterly profit increases in the historically undervalued range are confirmed, an explosive increase in stock prices is expected.”

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com