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On May 9, HSBC Research published a report, expecting Xiaomi (01810.HK) to perform better than expected in the first quarter of this year, with net profit expected to increase 1.39 times year-on-year to RMB 10 billion, mainly driven by a 50% year-on-year increase in IoT revenue, strong electric vehicle sales, and improved profit margins of various businesses. The bank expects the gross profit margins of IoT and electric vehicles to increase from 20.5% and 20.4% in the fourth quarter of 2024 to 23% and 21.4% in the first quarter of this year, respectively, mainly due to higher pricing power and optimized product portfolio. The bank raised Xiaomis target price from HK$70.4 to HK$73.5, maintaining a buy rating; and raised net profit forecasts for 2025 to 27 by 7%, 4% and 4% respectively. It is expected that orders for the electric car SU7 in May will normalize to more than 30,000 units, compared with a peak of 80,000 units in March, and believes that the YU7, which will be launched in June, will boost electric vehicle sales in the third quarter of this year.On May 9, Nomura issued a report stating that Hua Hong Semiconductor (01347.HK) reiterated its neutral rating and raised its target price by 116% from HK$16.4 to HK$35.4 due to strong local demand. However, although the groups pricing conditions have improved, the fixed cost burden may still exist, so the neutral rating is maintained. The report stated that Hua Hong Groups first-quarter revenue was in line with its guidance target, and the gross profit margin of 9.2% was lower than expected. Nomura believed that this may be due to the depreciation of the new plant. Due to the continued demand momentum, management predicts that the second-quarter revenue will increase by 3.5% quarter-on-quarter. Although Hua Hong Semiconductor believes that the price of 8-inch wafer foundry is under pressure (no price reduction yet), due to the shortage of supply, the price of 12-inch wafer foundry is expected to continue to rise. Nomura also believes that this is a good sign for the overall price dynamics of mature node wafer foundry in Asia.On May 9, Swedens Nordic Bank pointed out that the Federal Reserve is waiting for more clarity as risks rise. Both trade policy and the economic outlook are seen as extremely uncertain, and the Federal Reserve wants to wait for clearer results. The market interpreted this information as slightly hawkish and further reduced the possibility of a rate cut at the June meeting. We agree with this change in the market, but expect the Federal Reserve to ultimately focus on supporting economic growth and ignore the temporary rise in inflation. If long-term inflation expectations remain within a controllable range and consistent with the inflation target, the Federal Reserve should be able to ignore the temporary inflation shock caused by tariffs. There is also a possibility that the short-term impact of tariff uncertainty on the economy will be greater than currently expected. But for now, the Federal Reserve believes that the move will have limited impact on the economy, and there are some signs of progress in trade negotiations. Inflation is still above target and is expected to start rising again due to tariffs.Commerzbank plans to apply to the European Central Bank and German financial institutions for the next round of share buybacks at the beginning of the third quarter.Japans preliminary synchronized index for March was 116, expected to be 115.9, and the previous value was 117.3.

Samsung Elec announces a higher Q2 profit owing to solid server-chip demand

Charlie Brooks

Jul 07, 2022 11:18


Samsung Electronics (OTC:SSNLF) Co Ltd announced its greatest April-through-June profit since 2018 with an 11 percent year-over-year gain, as demand for its memory chips from server customers more than offset decreased sales to smartphone manufacturers due to inflation.


The world's leading memory chip and smartphone manufacturer stated Thursday that its second-quarter operating profit grew to 14 trillion won ($10.73 billion) from 12.57 trillion won a year earlier.


It was quite close to Refinitiv's SmartEstimate of 14,45 trillion won.


In agreement with market estimates, Samsung (KS:005930) announced in a short earnings report that sales likely climbed by 21 percent year-over-year to 77 trillion won.


This month, Samsung will provide detailed financial results.


Large U.S. IT companies that rely heavily on data center services continued to acquire chips to meet cloud demand, insulating Samsung's chip revenue from a potential client oversupply after two years of high demand.


According to the data source TrendForce, the price of some DRAM chips, which are utilized in electronic devices and servers, decreased by around 12 percent last month compared to the same time period one year prior. As demand for smartphones and laptops decreases, analysts believe that prices will continue to fall.


"Server DRAM is currently the only feasible sales channel... As a result, Korean manufacturers were the first to signal a willingness to contemplate a quarterly price cut of more than 5 percent (for server goods) "DRAMS," according to TrendForce.


According to TrendForce, the costs of NAND Flash chips, which are used in electronic devices for data storage, are projected to decline by as much as 5 percent between July and September compared to the previous quarter.


Following two profitable pandemic years in which customers purchased devices for remote work, chipmakers throughout the globe are observing a fall in demand.


According to analysts, rising prices, worries of a dramatic market collapse, the Ukraine war, and China's COVID-19 lockdowns have hampered smartphone sales, leaving server chip demand as the only bright light.


During morning trade, the price of Samsung's stock jumped by 0.9%.