Shares of Samsung Electronics Co., South Korea’s leading smartphone and memory chip manufacturer and bellwether of Korean blue-chips, are being helped by expectations for better business prospects and shareholders’ benefits.

Investors and analysts alike believe the technology giant’s performance has bottomed out in the first three months of this year and will strengthen from the second quarter onwards.

Samsung Electronics’ stock closed Wednesday up 3,000 won at 1,256,000 won ($1,068.9) from the previous day. In recent six days, the stock ended down only once, gaining 5.4 percent over this period. It ended 0.6 percent higher at 1,263,000 won on Thursday.

The latest upward momentum stems from expectations that the worst may be over for the company. Samsung Electronics, which had performed disappointingly in the final quarter ending in December, is expected to do better in the first quarter ended March this year. Analysts revised down estimates for the first-quarter operating profit to 5.25 trillion won from 5.99 trillion won at the beginning of the year. The second-quarter profit is now estimated at 5.79 trillion won from earlier 6.59 trillion won.

But the consensus significantly improves when estimate is narrowed down to recent one month rather than three months. According to local market analyst provider FnGuide,

the average estimate of Samsung Electronics’ operating income for the first quarter increased from 5.14 trillion won on Mar. 2 to 5.16 trillion won on Mar. 15. Analysts are moderately adjusting up their estimates upon counting actual shipments during the first two months. The average estimate for the company’s second-quarter performance also increased from 5.61 trillion won to 5.65 trillion won from Mar. 2 to Mar. 15.

Poor performance in the semiconductor and display divisions is expected to continue. According to the Semiconductor Industry Association (SIA), overall sales of the global semiconductor market declined 5.8 percent on-year to $26.9 billion in January. Sales dropped in most regions except for China. In North America, semiconductor sales fell 16.9 percent while in Europe 7.7 percent and in Japan 5.1 percent. The global memory semiconductor market is also expected to see a 3 percent drop in sales this year.

“Even as liquid crystal display (LCD) TV panel makers are up to their neck with inventories, panel makers continue to overwhelm supplies,” said Kim Young-woo, a researcher at SK Securities Co. He predicted Samsung could run into heavy losses in its LCD division.

Analysts are more upbeat on the company’s IT and mobile device division thanks to cost-cutting efforts. Samsung is expected to benefit from the lackluster performance of the latest iPhone 6 of rivaling Apple Inc. with its newest Galaxy S7 series. The cheaper won also would help the phone maker gain price competitiveness.

Upon hopes for better performance and the company’s efforts to bolster stock value, foreign investors have begun to change their position on Samsung Electronics’ stock. The company in October announced that it will buy back and cancel 11.3 trillion won worth of its own shares incrementally to raise shareholders’ value. In the first batch, the company purchased 4.2 trillion won worth of shares from Oct. 30 to Jan. 12 and cancelled them. Foreign investors have not stopped net selling until then. But they eased sell-off after the company began the second round of the buyback program on Jan. 29. From March, they shifted to net buying position, recording a net buying of 95.5 billion won worth shares as of Mar. 15.

Samsung pitched further gain confidence from investors by pledging to enhance shareholders’ reward program and management oversight by disallowing the chief executive to co-head the board during the shareholders’ meeting on Mar. 11.

“Much of the uncertainties have been lifted. Investors are more focused on the upside - improving shareholders’ benefits and solid financial structure,” said Lee Jeong, an analyst at Eugene Investment & Securities Co. while upping the target price for the stock to 1.5 million won.

By Noh Hyun

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