Brokerages Optimistic about Samsung Electronics’ Stock Price

Samsung Electronics’ stock price has reached close to the $60 (80,000 won) mark, boosting optimism among brokerages and analysts. The company’s performance is expected to have improved in the fourth quarter of last year, encouraging South Korea’s leading brokerages to raise their price targets for Samsung Electronics.

Who is Samsung?

Samsung is one of the world’s biggest producers of electronic devices and one of the most popular brands in technology. A South Korean company, Samsung creates a fifth of South Korea’s total exports which include electronic appliances, digital media devices, semiconductors, memory chips, and integrated systems.

Early beginnings and multiple acquisitions

Samsung, which in Korean means “three stars”, began as a grocery trading store back in 1938, when Lee Byung-Chull started trading noodles and other products in the city and exporting them to China and its provinces. After the Korean War,Samsung expanded to include textiles and opened the biggest woollen mill in Korea.

In the late 1950s, Samsung managed to acquire three of Korea’s top commercial banks, an insurance company and cement and fertilizer firms. In the 1960s it acquired additional insurance companies, an oil refinery, a nylon company, and a department store. In the 1970s, the company to boost its appeal and beat the competition, expanded into textile-manufacturing while a number of subsidiaries were established: Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision Company (Samsung Techwin).

Entering the Electronics industry

It was later in 1969 that Samsung will begin its electronics divisions.Samsung’s first products were black-and-white televisions, while later in the 1970s it exported home electronics products. It had also acquired a 50% stake in Korea Semiconductor. Samsung’s technology businesses were rapidly developed in the 70s and 80s.1978 saw the creation of an aerospace division while in 1985 Samsung Data Systems was created, expanding the company’s information technology services. The creation of two research and development institutes pushed Samsung into new areas such as high-polymer chemicals, genetic engineering tools, telecommunications, aerospace, and nanotechnology.

Globalisation

After Lee Byung-Chull’s death in 1987, his son Lee Kun-Hee took over, leading the electronics company, while 4 other companies were run by other sons and daughters of Lee Byung-Chull. Lee Kun-Hee wanted to transform the company and he famously said to Samsung executives, “Change everything but your wife and kids.” Lee proposed a “new management” concept where employees were encouraged to highlight errors to their bosses, focus turned to quality of products instead of quantity, and women were promoted to senior executives. Lee Kun-Hee succeeded in changing the culture and mentality of Samsung and helped expand it further into global electronics markets.

However, the success of the company was also coupled with various scandals including patent-infringement suits and bribery. In 1996, Lee Kun-Hee was found guilty of bribing former president Roh Tae-Woo and was sentenced to two years in prison. The company continued leading the technology sector with its semiconductors and LCD screens, becoming one of the top five companies in global market share.

Samsung Galaxy smartphones

In the 2000s, Samsung’s Galaxy smartphone series would become the most popular products and the best-selling smartphones in the world. Samsung also provided microprocessors for Apple’s initial iPhone models and was one of the biggest microprocessor manufacturers in the world in the late 20th and early 21st centuries. After 2010, the Galaxy series expanded to include tablet computers with the Galaxy Tab and smartwatches with the Galaxy Gear in 2013. A foldable smartphone, called the Galaxy Fold, was introduced in 2019.

Indictment and tax evasion

Lee was indicted in 2008 on charges of breach of trust and tax evasion and resigned as chairman of Samsung. He was fined almost $80 million and sentenced to three years suspended jail time for tax evasion. He was pardoned by the South Korean government in 2009 so that he could keep his place on the International Olympic Committee and lead South Korea’s successful bid for the 2018 Winter Olympics at P’yŏngch’ang.

In 2010, he became the head of Samsung Electronics, which remained the conglomerate’s largest division and soon after he returned as chairman of the Samsung Group. After a heart attack in 2014 which left him incapacitated until his death in 2020, his son, Lee Jae-Yong (Jay Y. Lee), became the leader of the Samsung Group. Lee was imprisoned in 2017 for bribing former president Park Geun-Hye and was also prosecuted in 2020 for financial crimes.

South Korean brokers bullish on Samsung Electronics

Samsung Electronics’ stock price is close to $60 (80,000 won) and has boosted optimism among brokerages. Analysts expect the company’s performance in the fourth quarter of 2023 to have notably improved.

South Korea’s leading brokerages Hana Securities and SK Securities have increased their price targets for Samsung Electronics at 100,000 won for 2024.

Kim Rok-ho who is a Hana Securities analyst has revised Samsung’s fourth-quarter operating profit estimate to 4.3 trillion won from 2.8 trillion won. He explained that the decision to revise the estimate upward was due to the “narrowing losses in the memory chip sector.” Kim also increased Samsung’s fourth-quarter revenue estimate to 69.5 trillion won from 67.4 trillion won. Kim stated that “The NAND sector should contribute significantly to reducing losses as NAND memory chip prices have risen more than 20 percent quarter on quarter, as seen in Micron’s earnings report.” Han Dong-hee, another analyst working for SK Securities, has also increased Samsung’s stock price target to 100,000 won as he also expects the company’s fourth-quarter revenue to reach 70.8 trillion won, and operating profits to 3.3 trillion won.

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