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By Jhoo Dong-chan
Fear is prevalent among investors regarding the share prices of semiconductor manufacturers after Samsung Electronics and SK hynix posted disappointing earnings for the first quarter, but market analysts remain positive on their future.
According to the Financial Supervisory Service (FSS), the nation's leading chipmaker Samsung Electronics posted an operating profit of 6.2 trillion won ($5.46 billion) in the first three months of the year, down 60.36 percent from a year ago.
This is the worst operating profit since the firm posted 5.2 trillion won in the third quarter of 2016.
Sales stood at 52 trillion won ($45.8 billion), a 14.13 percent decrease year-on-year.
Market researcher FnGuide said the operating profit of SK hynix, which hit 4.37 trillion won in the first quarter of 2018, is expected to dip below 1.6 trillion won in the January to March period.
Despite their earnings shock, market analysts remain positive in their outlook for the chipmakers' future share prices.
"Samsung Electronics' earnings didn't dip below the anticipated level," said IBK Securities researcher Kim Un-ho.
"The industry reached its low in the first quarter of this year, and is expected to recover in the second quarter. New mobile products will hit the market while Intel will introduce its new CPU models soon."
Kim kept the target share price of Samsung Electronics unchanged at 53,000 won.
Daishin Securities analyst Lee Su-bin said Samsung would continue its earning shock even in the second quarter, but remains positive on the firm's future share price.
"It is expected to post 52.3 trillion won in sales in the next quarter, down 11 percent from a year ago. Its operating profit is also expected to suffer a 57 percent fall year-on-year to 6.3 trillion won, but we have decided to keep our investment opinion unchanged at 'buy,'" Lee said.
"Under the shareholder return policy, Samsung is raising its dividend payout ratio, a positive factor to its share price. We also believe mobile memory chip demand will recover in the second quarter."
Lee set Samsung's target share price at 50,000 won.
Reflecting the market's high expectations, foreign investors bought 450.3 billion won worth of Samsung Electronics shares during the first week in April. They also bought 258.2 billion won worth of SK hynix shares in the same period.
"The nation's chipmakers have long borne the brunt of the prolonged trade dispute between the U.S. and China. However, talks between the two countries are expected to conclude successfully by June, while the U.S. Federal Reserve has turned dovish," NH Investment & Securities analyst Kim Byung-yeon said.
