Samsung Stock Gets Big Push with Binary Options Trading Sites
Samsung Electronics Co Ltd (005930.KS) started the year at 1,333,000 won, and it is now trading at 1,270,000 won on the Korean Stock Market. The stock has lost 4.3% for the year to date, with the biggest fall occurring between April 2015 and August 2015. Since then there has been a resurgence in the share price from a low of 1,067,000 to its current level. Binary options trading sites have capitalized on the reversal in the share price of Samsung over the past two months, having recorded a strong uptick in call options. If we look at the market fundamentals for this company’s stock, it is clear that the price is midway between the 52-week high and the 52-week low. On the low end, Samsung is priced at 1,033,000, and on the high end it is priced at 1,510,000. The company’s market capitalisation is 189.12 trillion Korean won, and the price-earnings ratio is 9.73.
What is in the pipeline with Samsung?
Sales of the new Samsung Galaxy smartphones have been tepid at best. This has caused a great degree of consternation with investors who have been weighing their options with regards to the stock. The latest smartphone released by Samsung – the Galaxy S6 – has received a tepid response from customers the world over. This has fueled investor anxiety, resulting in a plunging share price in Q3, 2015. But there is hope yet for Samsung shareholders, since the company has $55 billion in cash available. Investors and economic analysts alike are expecting the company to initiate a series of share buybacks this month to restore investor confidence in the company. This is typically a surefire way to get investors interested in the stock again. As a case in point, Apple Inc (AAPL) has used share buybacks to boost shareholder confidence.
If Samsung decides to use its cash resources to purchase stock, the share price could surge by as much as 20% according to analysts. That would effectively wipe out all of the losses incurred by the company for the year to date. The chief concerns for the company include lagging sales of the Samsung Note 5, and the Samsung S6 smartphone. Stiff competition from Chinese smartphone manufacturers and Apple has put the brakes on Samsung’s profitability this year. Should the buyback take place, it will be the second one since 2007. Analysts point to the fact that Samsung has shaved $22 billion off the top in 2015, and the buyback may be the only way to restore confidence in the company. Profits at the company have increased for September year-on-year from 4.1 trillion Korean 1 to 6.7 trillion Korean won, but that pales in comparison to the profits recorded in 2013 (10.2 trillion Korean won).
Samsung Still Dominating Market Share
Q3 guidance from Samsung has bolstered the company standings in the market. The latest releases from the smartphone giant – the Galaxy S6 edge + and the Galaxy Note5 – may not be selling like hot cakes, but Samsung retains its position as market leader. Although that lead is diminishing, thanks largely to Apple’s encroachment into Samsung’s territory, Samsung is for now still the market leader. However, this has all come at great cost to Samsung which has now recorded 7 successive quarters of declining profits. During Q1 and Q2 of 2015, Samsung generated 43% of its operational profits from its mobile communications division and its information technology division. This is a result of its strong sales in smartphones.
Despite falling sales figures, Q3 profits from the company indicated that operating profits will rise by 7.3 trillion Korean won on sales of overall sales of 51 trillion Korean won. In dollar terms this translates into $6.3 billion in operating profits off sales of $44 billion. More good news is that the forward guidance from Samsung beats analysts’ expectations.
It is clear from the lukewarm response to the latest smartphones from Samsung that the company has been generating its profits from things other than its latest products. This points to the mobile communications and IT division. It has also been reported that mobile telecommunication carriers are reducing the prices of Galaxy S6 edge units and the Galaxy S6 unit owing to poor sales figures. The more likely reasons for the Q3 turnaround in profits for the company are its semiconductor operations and the cross-currency exchange rates. Since the US dollar appreciated so strongly against a basket of currencies in 2015, this allows for greater exports from Korea. The Korean won depreciated by 12 percentage points against the USD during Q3, and this added hundreds of billions to the operational profitability of the company. Samsung has also been pushing its devices solutions and semiconductor operations hard, and this has likely contributed significantly to the bottom line.
Samsung Holds a Slim Lead Over Apple Inc.
During the course of Q2 2015, the global smartphone market increased by 13%, year-on-year. Most of the growth came from EM countries, with slowdowns taking place across North America, Western Europe and China. Android smartphones formed the bulk of shipments for Q2, 2015 at 82.8%, with Samsung dominating the market especially in the low-cost smartphone sector. Binary options trading sites reacted to the declining market share of Samsung, which has fallen from 32.2% in Q2 2012, to 31.9% in Q2 2013, dropping to 24.8% in Q2 2014 and now leading with a slim 21.4% in Q2 2015. Samsung’s nearest rival is Apple Inc which has a market share of 13.9% as at Q2 2015. Other smartphone companies making up the remainder of the market include Huawei at 8.7%, Xiaomi at 5.6% and Lenovo at 4.7%.
