Stock is down 21% from January 11, 2021 peak

The world’s largest memory chipmaker, Samsung Electronics has seen its shares plummeting in the past few months.

In fact, the global tech sell-off has dealt a fresh blow to Samsung whose shares have sharply underperformed the broader South Korean equity market this year. Having lost more than three per cent so far this month, Samsung is now down 21 per cent from a January 11, 2021 peak with foreign investors selling a net US$15.3 billion worth of its shares.

This is leading to concerns about the impact of inflation, which is adding to worries about slow phone shipments and peaking DRAM chip prices.

Bloomberg reports that while it’s still early days in October, the stock is staring at a fourth straight month of losses, which would be the longest such losing run since 2018.

SAMSUNG STOCK EXPECTED TO GAIN

The tone from analysts in Korea, where sell ratings are a rarity, still remains bullish. About 93 per cent of 45 analysts covering the stock market have a buy or equivalent rating on Samsung, up two percentage points since early August. This, according to Bloomberg compiled data.

No one has a sell rating on the stock, however, some analysts are expecting Samsung to gain 40 per cent over the next 12 months.

“The overall operating profit this year is beating the market consensus by a great extent so the continuing earnings surprise needs to be re-evaluated,” Hyundai Motor Securities Co. analyst, Roh Geun-Chang said in a note.

“Buy-and-hold strategy should remain effective as the quality of profit has begun to change,” he suggested. Samsung is now trading at less than 11 times forward earnings, close to the five-year average, compared with smartphone rival Apple Inc.’s multiple of 25 times.

Apple shares have gained more than nine per cent since January 11 this year.