Samsung Electronics’ share price after Lee Jae-yong’s arrest [핫이슈]

Samsung Electronics Vice Chairman Lee Jae-yong was sentenced to two years and six months in prison at a repatriation trial for the destruction of the Gukjeong Nongdan, and the stock price of Samsung affiliates fell sharply in the aftermath of being imprisoned. Samsung Group stocks evaporated 28 trillion won in market cap (market cap) on the 18th. In particular, Samsung Electronics’ stocks, which had risen to the mid-90,000 won range as individual investors started to buy intensively, fell by more than 3%, reducing the market cap by nearly 18 trillion won. If so, has the momentum of Samsung Electronics’ share price rise disappeared due to the absence of Vice Chairman Lee? It may or may not.

The result of Vice Chairman Lee’s ruling could be the beginning of the mediation, as it rose a lot in a short period of time. As the semiconductor market is entering the supercycle, the market environment is good, but the absence of a CEO is clearly a bad thing. This is because delayed decision-making can rob competitors. If the investment schedule led by Vice Chairman Lee is delayed, it could adversely affect performance.

However, it remains to be seen whether the intrinsic corporate value of Samsung Electronics will be damaged. Samsung Electronics is a system driven company. The planned investment will continue as it is, and the R&D capability or brand power will not disappear immediately due to the absence of a CEO. In addition to the semiconductor market entering the super site this year, as the spread of Corona 19 gradually subsides due to the development of vaccines and treatments, there is a high possibility that the demand for fields focused by Samsung Electronics such as home appliances and information devices will increase rapidly. Both sales and operating profit are expected to rise. This year’s sales, estimated by securities companies at the end of last year, are expected to exceed 250 trillion won, about 15 trillion won more than last year. Operating profit is also expected to reach 50 trillion won, an increase of more than 10 trillion won.

In addition to memory semiconductors, securities companies raised their target prices by seeing that new businesses such as foundries (consignment production) and system semiconductors will improve. Even if the top management shakes, this trend will remain unchanged for the time being. Earnings per share (EPS) is gradually rising from the 4,000 won range last year to 5100 won in 2021 and 6400 won in 2022. However, in addition to the appearance of Vice Chairman Lee, the unexpected’Black Swan’ should be warned. Conflict between the United States and China, and geopolitical risks. In summary, short-term corrections are inevitable, but long-term uptrends will continue.

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