Samsung Elec seen as 2023 top outperformer in Korea

Samsung Electronics Co. topped the list of stocks expected to outperform the South Korean stock market in 2023 on the prospect of a rebound in the memory chip market later this year, a survey shows.

The world’s largest memory chipmaker received the highest number of votes, with eight brokerage firms picking it as the best stock to buy, according to a survey of South Korea's 10 largest securities firms by equity capital. The poll was conducted by The Korea Economic Daily on the occasion of the new year.

This year, Samsung is expected to rise to as high as 73,083 won ($61), about 30% higher than its closing price on the last trading day in 2022, according to market tracker FnGuide.

Analysts say the memory chip market is coming out of the tunnel as the industry is expected to run low on chip stockpiles around the second half of this year.

“Stock prices tend to move around six months ahead of their industry cycles. It would be appropriate to buy chipmakers early this year,” said NH Investment & Securities.

Further, analysts see Samsung’s cost competitiveness shoring up its bottom line in the declining industry.

They say the world’s top smartphone brand will unlikely join other chipmakers in cutting production this year. That will eventually boost Samsung’s market share in 2024 when the DRAM industry will likely face supply shortages.

GROWTH STOCKS

Two other Samsung Group units Samsung SDI Co. and Samsung Biologics Co. came in distant second and third places, gaining votes from four brokerage firms respectively.

Samsung Biologics, a biologics contract manufacturer, is expected to benefit from the facility expansion in its fifth plant at home, alongside an increased output in its fourth factory after winning substantial orders.

“An expansion of its fifth factory will provide an upside momentum to Samsung Biologics this year,” said Korea Investment & Securities.

As for Samsung SDI, its mass production of Gen5 batteries will likely increase its operating profit margin to the 9% level. Gen5 is a type of high-performance battery used in electric vehicles.

Other stocks on the list include Celltrion Inc., which took a hit from rising interest rates last year. It was recommended by three brokerage firms.

As the patents of the world’s top biological medications for autoimmune diseases such as Humira and Stelara are expiring this year, Celltrion is in rush to churn out their biosimilars.

Celltrion’s 2023 operating profit and revenue are expected to jump 23.7% and 12.8%, compared to last year’s projected results, based on FnGuide’s consensus forecast.

Regarding LG Chem, cathode materials for batteries will likely push its earnings higher, with its mainstay chemical business poised to bottom out, Shinhan Securities said. It won three votes from three securities firms.

Hanwha Solutions Corp., a solar panel supplier, was added to the list of stocks likely to shine this year, picked by three securities firms.

TEN-BEGGAR STOCKS

Among small-cap stocks, three Kosdaq-listed companies look set to be ten-beggars, or posting a tenfold increase in their stock prices this year. Osstem Implant Co., processed steel pipe manufacturer Sung Kwang Bend Co. and special purpose machine maker TSI Co. are high on the list.

Osstem has been enjoying hefty earnings on the back of brisk sales in China. Its target price ranges between 160,000 and 170,000 won, according to Samsung Securities and Daishin Securities. That compared to its closing price of 138,100 won on Dec. 29, 2022.

Write to Tae-Woong Bae at Btu104@hankyung.com
Yeonhee Kim edited this article.