April 19, 2024

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[THE INVESTOR] The number of preorders for Samsung Electronics’ flagship smartphone Galaxy S8 has hit 550,000 units for the first two days since it began in Korea, leading analysts to anticipate the turnaround of its key parts suppliers, Samsung Electro-mechanics and Samsung SDI. 

The number of preorders for the Galaxy S8 and Galaxy S8 Plus on April 7 and April 9 was much higher than its predecessor Galaxy S7, which sold 100,000 units, and Galaxy Note 7, which sold 200,000 units, during the same period last year.

Most local analysts predicted the annual sales of the Galaxy S8 and Galaxy S8 Plus would be around 45 million to 50 million units.

Yoo Jong-woo, an analyst at Korea Investment & Securities, said, “As the initial market response of the Galaxy S8 is better than expected, we revised up the previous estimate by 7 percent to 45 million units.”

Its predecessor Galaxy S7 sold 48.5 million units in 2016 with cumulative sales of 52 million units.

With the Galaxy S8 preorders off to a solid start, its key parts suppliers including Samsung Electro-mechanics and Samsung SDI, which both posted operating losses in the fourth quarter of last year, are expected to make a turnaround, analysts said.

Samsung Electro-mechanics, which has provided camera modules for the Galaxy S8, fell into the red in the fourth quarter for the first time in nine quarters due to the discontinued sales of the fire-prone Note 7.

“Samsung Electro-mechanics’ camera module business will recover with the rollout of the Galaxy S8 in the first half and the Note 8 in the second half,” said Peter Lee, an analyst at NH Investment & Securities.

“The company is expected to make a turnaround in the first quarter with an operating income of 30 billion won ($26 million) and to post an operating profit of 255.5 billion won this year,” Lee added.

Samsung SDI, which posted operating losses over the last 10 quarters and further struggled in the second half of last year due to the Note 7 issue, is predicted to recover market credibility and see better performance this year, analysts said.

“Samsung SDI is expected to make a turnaround this year due to the increased proportion of the company’s lithium-ion polymer battery for the Galaxy S8,” said Park Kang-ho, an analyst at Daishin Securities.

“Samsung SDI is expected to post operating incomes of 21.7 billion won in the second quarter and 40.8 billion won in the following quarter,” Park added. 

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)