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Friday, May 3, 2013 by Christoph.Schmid|Comment 0
within category Samsung,00590,TIZEN OS,Smartphones,Galaxy,Smartbox
Headlines:
  1. At present, Samsung is the fastest growing IT company,
  2. Over 70M Smartphone units were sold in the 1st quarter of 2013; this represents an increase of over 60%. In total, the company has sold more than 107M components, 
  3. The operating margin has increased to 16.6%; this rate has been constantly improving since Q1/2011,
  4. In the mobile telephone sector, Samsung covers the entire product range, from low-end to high-end; the company also produces semiconductors, flash memory items (DDR2, DDR3 and NAND), flat panels for LCD TV’s and screens. They also have exposure to the Smartbox business,
  5. The launch of the Galaxy S3 mobile was a success, consumers are now waiting for Galaxy S4, which has, in addition to other features, an improved processor,
  6. With the disappointing release of Apple’s iPhone 5, the Galaxy S3 could become the new reference for smartphone users.

Strengths and weaknesses analysis / Fundamental analysis
Strengths:
  • Every third smartphone sold across the world, was manufactured and assembled in a Samsung factory,
  • Samsung develops and manages the entire smartphone value chain, i.e. from the study, to the design, to the foundries, to the assembly and finally the sale of its products,
  • The operating system TIZEN, which is the company’s first full in-house OS,  puts the company in a favourable place to outpace Apple,
  • Samsung’s recent sales progression has occurred principally in Asia, Middle East and Africa,
  • Samsung is one of the principal manufacturers of NAND memory. Given the ever increasing demand and the present production limitations, it can be expected that capacities will run short by the  Q03/2013  and will last into the summer of 2014. Samsung could take advantage of the shortage to increase prices.

Weaknesses:
  • Due to technical problems, the production and sale of Smartphones with a flexible screen was delayed,
  • The Galaxy S4 phone is a high-end product. It is being sold at a recommended price of €679 in Europe; which could prove too onerous for Europeans suffering under austerity measures,
  • With the launch of the TIZEN OS, Samsung has entered into direct competition with its present partner Google,
  • The technology sector is highly cyclical, any change in consumer sentiment will heavily impact the company’s results,
  • Long-term price trends for smartphone’s and tablets are negative given the ever increasing competition,
  • Given the slow-down in PC sales, sales figures for Samsung’s DDR2 and DDR3 devices will continue to suffer.

Investment profile and investment opportunity:
Operational risk: Below average
Expected sales growth: Above average
Investment orientation: Group “Global Strategies” and “Best-in-Class” investment themes

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