As Samsung's profit surges, some investors worry about peaking growth

Thu Apr 13, 2017 3:03am EDT
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By Se Young Lee

SEOUL (Reuters) - Even as Samsung Electronics Co Ltd (005930.KS: Quote) is poised to deliver a surge in earnings to an all-time high this year, some investors are already starting to fret the tech giant will soon become a victim of its own success.

With a market capitalization of 331 trillion won ($293 billion), the South Korean firm has emerged as Asia's most valuable company and its shares have jumped 60 percent since end-2015, hitting a record high in late March.

The outlook is upbeat with analysts seeing high chip prices continuing at least through to the end of this year, and the launch of a new flagship smartphone this month reviving its mobile business after last year's Galaxy Note 7 fires.

But the stock is losing steam, up just 3 percent so far in April, and some investors are questioning the company's long-term growth potential and whether it can maintain the double-digit profit growth expected this year.

"People are starting to worry whether Samsung can repeat these kinds of numbers next year," said Park Jung-hoon, fund manager at HDC Asset Management. "There's no reason to be the first to jump off, but those worries will grow as time passes."

Samsung's operating profit is expected to grow just 5.5 percent next year compared to 61 percent in 2017, according to the average forecast from a Thomson Reuters survey of 16 analysts.

SHORT MEMORY   Continued...

Shareholders walk past the logo of Samsung Electronics before their general meeting at a company's building in Seoul, South Korea, March 24, 2017.  REUTERS/Kim Hong-Ji