According to data from the Korea Exchange, Samsung Electronics' stock price closed at 45,750 won on Friday, up 0.44% or 200 won from the previous trading day. However, in the session, Samsung Electronics' stock price once fell to 45,450 won, almost falling below the 45,000 won mark. Since the Samsung Electronics stock split in early May, the stock has fallen all the way, down 13.67% from the 53,000 won after the stock split. Samsung Electronics’ operating profit in the second quarter was 14.87 trillion won ($13.18 billion). The momentum of record earnings for the last seven consecutive quarters has come to an end. This unexpected performance has adversely affected its share price.
Samsung Electronics recently announced the highest dividend in the history of the company, but the market has given a cold response. Some securities companies even said that dividend funds should reduce the holdings of Samsung Electronics shares.
In the last two to three years, equity funds have increased their yields by increasing their holdings of large-cap stocks such as Samsung Electronics. In fact, in South Korea, the largest position of 162 funds is Samsung Electronics, of which 106 funds hold Samsung Electronics shares. More than 10% of their portfolio. Until the first half of last year, they also maintained a high rate of return through Samsung Electronics, even though the company's dividend payout ratio is very low.
However, the situation has changed recently. For example, the KB Research High Dividend Securities fund holding the highest position in Samsung Electronics has a negative return of 6.65% over the past year and a negative return of 11.41% over the past three months. Samsung Electronics’ share price fell after some market researchers warned that the semiconductor boom cycle was coming to an end.
In contrast, as Samsung's number one competitor in the smartphone market, Apple's market value has soared. Apple recently became the first US company with a market capitalization of more than $100 billion. The stock closed at $207.99 last Friday, an increase of 0.29%. Since the release of the second quarter results on July 31, Apple's stock price has risen every day.
From the perspective of price-earnings ratio, Samsung Electronics' share price is higher than Apple's, but this is not the case. According to DB Financial Investment, Samsung Electronics' P/E ratio is currently 6.4, which is lower than the average 9.4 times of the Korea Composite Stock Index. On the other hand, Apple's forward P/E ratio is 15.7 times, which is more than twice that of Samsung Electronics. P/E ratio is the ratio between stock price and earnings per share. A lower P/E ratio means that the market value is undervalued. In other words, under normal circumstances, Samsung The share price of electronics will rise in the future, because the company's price-earnings ratio is not only lower than Apple, but also lower than many other companies in the Korean stock market.
However, the P/E ratio is only one of the valuation criteria. The bleak outlook for corporate earnings is the real crux of Samsung Electronics. This is mainly due to the unstable semiconductor market prospects, which contributed 78.6% of Samsung Electronics' operating profit.
Market research firm DRAMeXchange expects that the price of NAND flash memory chips will continue to fall to the first half of next year. Therefore, Samsung Electronics' corporate profits will decline further in the future. In contrast, although the iPhone accounts for 60% of Apple's total revenue, Apple Service stores such as App Store, Apple Pay, iTunes and iCloud saw a 31% year-on-year increase in revenues in the second quarter. As Apple successfully achieved revenue diversification, the company was positively evaluated by the market.