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Samsung Electronics Co (SMSN) GDR each Representing 0.5 KRW5000 (REG'S'/144A)

Sell:$1,602.50 Buy:$1,603.50 Change: $37.50 (2.29%)
Prices delayed by at least 15 minutes | Switch to live prices |
Change: $37.50 (2.29%)
Prices delayed by at least 15 minutes | Switch to live prices |
Change: $37.50 (2.29%)
Prices delayed by at least 15 minutes | Switch to live prices |
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

HL comment (25 October 2013)

Third quarter results: South Korean group Samsung has announced a 26% hike in profits driven by a strong recovery in its memory chip business and buoyant smartphone sales. The world's largest smartphone maker posted a net profit of 8.24 trillion won, ($7.6 billion) up from 6.56 trillion won in the same period a year ago. However, the company saw "intensifying market competition" in the mobile devices space, it said. Shipments of its high-end smartphones remained flat quarter-on-quarter, despite the release of its Galaxy Note 3 phablet last month. Furthermore, the company expects growth in smartphones to slow due to intensifying competition on the build up to the festive season. Elsewhere, Samsung's semiconductor business also reported big gains in its profits, with revenue growing 12%. Sales of the company's memory chips have increased due to demand brought on by smartphones and tablets, servers, and game consoles. Nonetheless, there have been concerns over whether Samsung can continue to grow at such a strong pace, not least because of increased competition and saturation of some key markets. Based on the combined estimates of analysts covering the company, market consensus opinion currently remains a buy.

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Financial Highlights:
  • Samsung reported a record quarterly profit of 8.24 trillion won, ($7.6 billion) up from 6.56 trillion won during the same period a year earlier.
  • The group's mobile division, Samsung's biggest profit generator, reported a record 6.7 trillion won profit in the period.
  • Profits at its chip business doubled to 2.06 trillion won, the highest level in three years, reflecting stronger chip prices.
  • Overall, sales rose to 59.08 trillion won, the company achieved sales of 52.18 trillion won a year earlier.

Negative Points:
  • Samsung unveiled in September its Galaxy Gear that will be competing with Sony's SmartWatch 2, which was announced in June while rival Apple is preparing to launch its iWatch early next year. The Galaxy Gear does not operate independently. At present, it can only connect to two of the company's products which may limit its appeal.
  • Samsung are hindered in investment terms by its being a "chaebol". A chaebol is peculiar to South Korea, and is usually typified by a conglomerate which owns numerous international operations, but which - importantly - is usually controlled by a Chairman who has power over all of the operations. These companies are also largely family owned, such that they tend to trade at a discount to reflect an approach which is not Western. Furthermore, detractors highlight the government's tendency to back the company regardless of the economic reality.
  • Samsung operates in a fiercely competitive space. Competition in the handset market alone will almost certainly intensify which may erode margins, in an industry where companies live and die by their ability to stay ahead of the innovation curve.
  • A significant concern for Samsung Electronics going forward is that around 70% of total operating profit comes from its mobile division.
  • Concern has been expressed that consumer appetite for top-of-the-range smartphones is beginning to wane.
  • In smartphones, Samsung is also facing a similar challenge to Apple in that consumers are increasingly buying its older less expensive models rather than the latest version. It also faces margin pressure in the current quarter as it invests in marketing its high-end Galaxy S4 and Note 3 smartphones during the year-end festive period.
  • Within its consumer electronics division, which includes TV manufacturing, Samsung saw a decline in profit due to a drop in demand in China and Europe.

Positive Points:
  • Samsung Electronics is the flagship subsidiary of Samsung Group, a multinational electronics company headquartered in Suwon, South Korea. It is one of the world's largest vendors in the tablet, mobile phone and smartphone markets that includes its Samsung Galaxy line of devices.
  • The mobile business continued to be the biggest profit generator for Samsung in the quarter. It reported a record 6.7 trillion won profit, a result of a greater variety of cheaper Galaxy smartphones boosted shipment volumes and helped counter weakening growth in the lucrative high-end segment. Its growth in the sector has seen it become the world's biggest smartphone maker.
  • Samsung said it would spend 24 trillion won in capital expenditure this year, surpassing the 22.8 trillion won spent in 2012. The company plans to invest 13 trillion won to expand its chip facilities and 6.5 trillion won in displays.
  • The company has invested heavily in distribution channels including opening brand shops in 1,400 Best Buy stores in the United States.
  • Wearable technology such as the Galaxy Gear is seen as a new growth driver for global computing companies amid increasing concern that the smartphone market has reached saturation point in the US and Europe.
  • The company benefits from product and geographical diversification. It also has leading market positions in the TV and memory products markets, within which prices of memory chips have remained strong in light of further innovation and are likely to remain so.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used.


The London Stock Exchange does not disclose whether a trade is a buy or a sell so this data is estimated based on the trade price received and the LSE-quoted mid-price at the point the trade is placed. It should only be considered an indication and not a recommendation.

Trades priced above the mid-price at the time the trade is placed are labelled as a buy; those priced below the mid-price are sells; and those priced close to the mid-price or declared late are labelled 'N/A'.