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Samsung Q117 Results
May 01, 2017 Samsung Electronics’ first quarter profits were the best since 2013 due to solid earnings from its memory chip and display segments. Samsung reported a 48 percent Y/Y rise in its first quarter operating profit to 9.9 trillion Korean won. Samsung also announced plans to cancel existing treasury shares worth over $35 billion by 2018, accepting proposals submitted by activist hedge fund Elliott. Shares initially dropped 1.8% after Samsung said it wouldn't be introducing a holding company structure, rejecting demands from Elliott Management, but later recovered to trade 2.4% higher. It also announced a buyback worth 2.3T won ($2.03B). Samsung Electronics shares hit a record high on Friday after their earnings report prompting analysts to boost their price target for the stock and forecast never-before-seen profit for the electronics giant. Revenues from the memory and display businesses increased driven by strong ASP and increased sales of premium products. However the company’s overall revenues only increased slightly year-on-year as revenue from IM business decreased due to delayed launch of Galaxy S8. The gross profit was KRW22.4 trillion, a KRW3 trillion year-on-year increase. And the gross profit margin improved by 5.3 percentage points. The OLED business experienced strong demand for flexible panels from major customers and look to maintain profitability in the LCD business by reducing costs. For the set business, they expect ASPs and operating profit to improve in the mobile business following the global launch of Galaxy S8. They also expect earnings to improve in the consumer electronic business thanks to the launch of QLED TVs. In 2017, they expect overall earnings to grow Y/Y mainly from the component businesses driven by favorable supply demand balances for the memory business and increasing the supply of OLED panels. They expect an increase in demand for high performance, low power chipsets such as memory, SOCs and sensors as well as for flexible OLED products driven by form factor innovation. The mix of OLED in terms of the revenue was ~60% of total DP revenue. For the mobile business the Q1 sales of handsets was 93 million units and tablet sales was 6 million. In Q2, both handset and tablet should be similar to Q1. Sales of LCD TVs in Q1 were roughly 10 million units and in Q2, they expect a small decline. For the year, TV shipments should increase by about low single-digits. Nomura upped its price target from 2.7 million Korean won to 3.3 million Korean won, which represents a 48 percent upside from Friday's close. It also said it expects operating profit of 53.2 trillion Korean won for 2017, which if achieved, would be Samsung's highest ever. The previous high came in 2013 when the company reported full-year operating profit of 36.79 trillion Korean Won. Capex was guided significantly up due to strong investments expected in NAND, large-scale integration (LSI), and OLED. First-quarter reported display capex was $3.6 billion (up 8% quarter-over-quarter from record high). Company commentary suggested that there could be significant growth in OLED capex for calendar 2017. Quick summary of the results:
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