LG Electronics, SK Hynix, And Naver Continue To Grow Due To Effects From Exchange Rate And Others
Starting with Samsung’s announcement on the 7th on its tentative performance in 3rd quarter, listed companies’ 3rd quarter’s earning seasons are starting. Although Samsung Electronics and other IT businesses’ performance fell short of values that they had hoped to get, they actually put up a good defense than expected by receiving positive effects from exchange rate.
It is predicted that Samsung Electronics’ tentative operating profit in 3rd quarter will be about $5.7 billion (6.6 trillion KRW), which is an improved result compared to a shocking announcement that they had made in October of last year about its tentative operating profit being early part of $3.4 billion (4 trillion KRW). The reason why Samsung Electronics was the first one to make an announcement of its tentative performance in 3rd quarter is because they take up the most weight out of South Korea’s stock market. It is an important event from the fact that one can estimate an overall earning season by looking at the information that Samsung Electronics presented.
Samsung Electronics’ sale is expected to be $43.5 billion (50.5 trillion KRW) and it is maintaining its steady upward trend. Although it seems that its tentative operating profit in 3rd quarter will be slightly less than 2nd quarter’s ($5.9 billion (6.9 trillion KRW), it won’t be at a level that had industries worried.
Although it is expected that Samsung Electronics will maintain satisfactory level of performance due to improvements in level of performances in AMOLED176, System LSI, and household appliances, it received the greatest direct benefit from exchange rate.
It is predicted that LG Electronics will make $12.4 billion (14.4 trillion KRW) and $258 million (300 billion KRW) in sales and operating profit respectively. Focus is on whether or not LG Electronics, which is hoping that its performance will improve due to favorable profitability in household appliances department, will make about the same operating profit as it did in 1st quarter. Although household appliances business seems falling, it is expected that profitability will improved due to decrease in price of raw materials.
It is predicted that SK Hynix, which is going through tough times due to expansion of decrease in price of D-RAM, will make about $4.3 billion (5 trillion KRW) and $1.2 billion (1.35 trillion KRW) in sales and operating profit respectively. Although stocks of D-RAM are increasing due to lack of demands for D-RAMs, exchange rate had a positive effect on its performance.
It is predicted that SK Telecom, which is a telecommunication service that produces demands for domestic markets, will make relatively high operating profit of $448 million (520 billion KRW) out of 3 telecommunication businesses. Although it is expected that growth rate of average revenue per unit (ARPU128) will not completely be satisfactory due to increase in number of members that choose contracts that save them much more money than receiving benefits from support fund, improvement of its performance is actually expected as increase in marketing cost won’t be too expensive.
It is expected that Naver will actually have better performance this year than last year as it will make $680 million (790 billion KRW) and $172 million (200 billion KRW) in sales and operating profit respectively. South Korea’s advertisements (search + banner) and increase in sales in line had the biggest impact on its performance. It seems that its operating profit will correspond to consensus (market’s estimated value) as marketing cost decreased greatly compared to previous quarter.
“We need to focus on each business that has consensus of its sales and operating profit increase as it faces 3rd quarter’s earning season. By knowing that there is a high chance that KOSPI will continue on with box pattern movement due to uncertainty in South Korea and foreign countries, it will be wise to be responsive by focusing on business that has individual momentum if businesses want to succeed in markets.” said researcher KoSeungHee of KDB Daewoo Securities Co.
Staff Reporter Lee, Sungmin | smlee@etnews.com