Samsung expected to recover with new Galaxy phones

April 3 news, according to foreign media reports, Samsung may see its profits from January to March this year decline for the sixth consecutive quarter, but investors are betting that the company's full-year performance will rebound this year, mainly relying on the company's chip sales to remain strong and the market has high hopes for its new generation of flagship smartphones .

Samsung shares hit a 21-month high in mid-March as brokerages raised their earnings forecasts and price targets on the company’s improving business outlook. Samsung shares gained 12.1% in the first quarter, after climbing 8.6% before that.

Confidence that Samsung's mobile phone business will stop falling in earnings has grown as positive reviews for its Galaxy S6 smartphone and its curved-screen version, due to be launched this month, have boosted investor confidence that the device will be a hit, while analysts say new mid-range phones will boost sales.

Samsung's performance recovery is also expected to be supported by strong chip sales. In addition to the healthy market demand for its memory chips, Samsung's system chip business is also expected to turn a profit this year. Its self-developed Exynos series processors will be installed on the new generation of Galaxy smartphones, and Nvidia has recently become Samsung's foundry customer.

“This is a year of recovery for Samsung,” said Park Sung-jae, a fund manager at LS Asset Management. “The stock price reflects this sentiment.”

To be sure, Samsung's recovery is expected to be gradual, with profits this year falling short of record levels in 2013. Samsung's first-quarter operating profit is expected to be 5.3 trillion won ($4.82 billion), down 38 percent from 8.5 trillion won a year earlier, according to 41 analysts polled by Thomson Reuters, due to weak earnings at its mobile division.

The company is due to release its first-quarter earnings guidance next Tuesday.

But analysts say deeper data shows a marked improvement, and that momentum will grow once the Galaxy S6 and S6 Edge are launched globally. Peter Yu, an analyst at BNP Paribas, expects Samsung to ship 44 million new phones this year, compared with an estimated 38 million units of the disappointing Galaxy S5 last year.

For Samsung's full-year performance this year, 51 analysts surveyed by Thomson Reuters on average expect its full-year operating profit to increase to 26.5 trillion won, compared with 25 trillion won in 2014 - at the beginning of this year, analysts generally predicted that the company's operating profit would decline again this year.

“We believe Samsung’s smartphone business is in full recovery phase,” Peter Yu wrote in a research note last week.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.