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Samsung hits record high on earnings hopes

Shares in Samsung Electronics hit a record high, fuelled by foreign buying and hopes for strong memory chip momentum and a robust earnings outlook ahead of results guidance next week.

The shares rose 7% so far this year after rising 77% last year, beating KOSPI's 55% gain, helped by a robust rebound in flat-panel TV sales and a once-battered memory chip industry.

“Our 12-month target on Samsung is 980,000 won but we will probably lift it to reflect views that the technology sectors' earnings will continue to post firm growth through the second quarter and even into the third quarter,” said Lee Min-hee, an analyst at Dongbu Securities.

“In terms of share prices though, we may see some corrections from after the second week of April. Monetary tightening moves by China are expected after its key economic data, which would weigh on the broader share market.”

Samsung, due to report first-quarter earnings guidance next week, is likely to report 4.1 trillion won ($3.65 billion) in consolidated Q1 operating profit on 36 trillion won revenue, according to Thomson Reuters I/B/E/S.

The estimated profit is up 11% from the fourth quarter and a nearly nine-fold jump from a year ago, when the global memory chip business was still in the industry's worst downturn.

Samsung, which overtook Hewlett-Packard last year as the world's largest electronics firm by revenue, said earlier last month that it was targeting record results this year with double-digit growth in sales.

The medium-term outlook is positive as demand for its bread-and-butter memory chips remain strong, especially from China, while supply has been curtailed as a result of a lack of investments during the lengthy downturn.

But longer-term prospects have turned cloudy as heavy investments have raised oversupply concerns and any slowdown in the global economy may sap consumer demand, hitting the profitability of handsets and appliances. (Reuters)