Samsung's share price has fallen in the recent past as concerns about the peak of the semiconductor supercycle have intensified. Although the company is expected to deliver its strongest third quarter performance ever this year, it does not seem to have any impact on its stock price. Market experts also have different views on the company's future.
Some industry insiders say that the growth of Samsung Electronics will slow down after the completion of the semiconductor super cycle. Others argue that the company's share price will bottom out and rebound because all the negative factors have been reflected in its share price.
As of Monday, Samsung Electronics shares closed at 43,850 won on the Korean Stock Exchange, down 0.57% from the previous trading day. In the same day, the stock fell to 43500 won, hitting a 52 week low. Samsung Electronics shares have fallen 24% in less than a year from a record high of 57,519 won set on November 3.
Samsung Electronics is setting new records every year, but its price-earnings ratio has fallen from 12 times in 2016 to 6.2 times today as share prices have fallen. This is significantly lower than the average price earnings ratio of the Korean composite index 10.7 times. In addition, the company's market rate is 1.5 times, only slightly higher than the liquidation value.
Despite Samsung's record performance, its share price continued to fall. That means the company has become a value stock in terms of valuation levels, not a leading growth stock in South Korea. Samsung Electronics shares rose to 3 million won last year before the 50-to-1 split, when it was seen as an absolute growth stock.
With stock prices lingering low, the market again invested Samsung Electronics as value stocks. That's because its share price is overvalued in comparison with the company's growth potential, although the industry has been expecting a record third-quarter operating profit of 17.3 trillion won ($15.41 billion).
However, foreign investment banks look at Samsung Electronics from different points of view. The semiconductor supercycle is over, Morgan Stanley said in a recent analysis, considering that demand from smartphones and servers is declining and China plans to enter the NAND flash market next year. In other words, Samsung Electronics will hardly continue to grow.
In response, South Korean insiders said that foreign companies are concerned