Taking Stock - Samsung Electronics profit rose by 44%.

In today's taking stock we discuss Samsung profit that rose and matched its expectations.

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MARKET COMMENTARY

SOUTH AFRICA

The Johannesburg Stock Exchange (JSE) extended its run of gains as positive growth indicators in the United States and China pumped momentum into shares globally. The benchmark FTSE/JSE All-Share index went up by 1.23% (now at 68,064 index points) while the blue-chip FTSE/JSE Top-40 index closed up 1.27%. After a slow start to its COVID-19 vaccine procurement and rollout programme, and fears of a reintroduction of tighter lockdown measures, South Africa is ramping up inoculations. The country has signed an agreement to buy 20 million doses of the Pfizer-BioNTech dual-shot COVID-19 vaccine.

 

 

EUROPE

European markets closed higher on Tuesday as trading resumes after the Easter holiday, with global sentiment boosted by positive economic data in the US and China. The pan-European Stoxx 600 provisionally ended the session up 0.7%, with basic resources adding 1.8% to lead gains as most sectors entered positive territory. The big corporate news out of Europe Tuesday was the announcement by Credit Suisse of several high-level staff departures and cuts to its dividends and bonuses. The Swiss lender now expects a first-quarter pre-tax loss of around 900 million Swiss francs ($960.4 million). Credit Suisse shares were down 0.4% by the market close.

 

 

US 

US stocks fell from record levels on Tuesday as the recent rally driven by signs of strong economic rebound took a pause. Shares of airlines and cruise lines continued their recent gains. Delta Air Lines rose 2.8%, while Carnival and Royal Caribbean both gained more than 1%. Norwegian Cruise Line jumped 4.6%. The market came under pressure even after more strong news on the job front. The Labor Department said Tuesday that US job openings rose 268,000 to a two-year high of 7.4 million on the last day of February, according to its monthly Job Openings and Labor Turnover Survey, or JOLTS report.

 

 

ASIA

Asia-Pacific markets rose this morning as major indexes in Australia, Japan and South Korea notched gains. Australia’s ASX 200 advanced 0.6%, with most sectors trading higher. Samsung Electronics shares dipped 0.35% after the chip and smartphone maker issued earnings guidance for the first three months of 2021. Samsung said it estimated operating profit for the quarter at 9.3 trillion Korean won ($8.3 billion), up 44% from a year ago. The company did not give detailed breakdown, which are due at the end of this month.

 

 

CURRENCIES

The rand edged firmer to a new five-week best on Tuesday, boosted by greater risk demand as US treasuries slipped and global commodity prices rallied. At the close, the rand was trading around R14.53 to the dollar or 0.2% stronger. The greenback slipped to a two-week low against a basket of currencies on Tuesday, as traders booked profits after a strong March. A fall in Treasury yields from recent peaks also put pressure on the dollar.

 

 

COMMODITIES 

Gold prices inched lower on Wednesday, retreating from a two-week high hit in the previous session, as a raft of strong US data boosted hopes of a quick economic recovery. Oil prices edged higher this morning on the prospects for stronger global economic growth amid increased COVID-19 vaccinations and a report that crude inventories in the United States, the world’s biggest fuel consumer, fell. Prices were buoyed as data on Tuesday showed US job openings rose to a two-year high in February while hiring picked up. This followed earlier data showing US services activity touching a record high in March and China’s service sector showing the sharpest increase in sales in three months.

LOCAL COMPANIES

Growthpoint (GRT) +2.9%

Almost three years after establishing a healthcare-focused property fund, Growthpoint Properties has developed and ‘sold’ its first greenfields hospital in South Africa – a new high-tech facility in the capital city. Growthpoint – the largest primary-listed real estate investment trust (Reit) on the JSE – spent R470 million to develop the Cintocare Hospital in Tshwane’s burgeoning Menlyn Maine green precinct. On Tuesday Growthpoint announced in a Sens statement that it had sold the hospital to Growthpoint Healthcare Property Holdings (Growthpoint Healthcare) for just over R515 million. Following the Cintocare Hospital acquisition, the fund now owns six private hospital properties and a ‘medical chambers’ building, which brings its assets under management to just over R3.2 billion. All previous acquisitions (largely in KwaZulu-Natal and the Western Cape) were of existing healthcare facilities, while the latest deal represents Growthpoint’s first hospital developed in-house under its developments division. The new hospital will be leased and operated by Cintocare Proprietary Limited, a new private healthcare group. This means that Growthpoint benefits from the deal from both a development-profits perspective and through rental income, via the Growthpoint Healthcare fund. “The Cintocare Hospital property is a world-class 100-bed facility and [the] first hospital to be developed on balance sheet by the group,” says Growthpoint SA CEO Estienne de Klerk. “It is a private facility that specialises in head, neck, spinal and vascular surgery. The hospital boasts state-of-the-art technology and many firsts for the continent, such as being Africa’s first green-star rated hospital,” he adds. Besides Growthpoint’s R470 million investment to build the hospital, Cintocare has injected R150 million into equipping and fitting out the hospital, while the hospital’s separately managed radiology unit represents another R70 million investment. “We have a great partnership with Cintocare and are proud to be with them at the cutting edge of creating a new clinical model in South Africa,” says De Klerk. “Together, we have pioneered and paved the way forward for specialist medical facilities in the country while establishing the specifications for a green building certification tool for local healthcare properties, which didn’t exist before this development,” he adds.

 

INTERNATIONAL COMPANIES

Samsung Electronics (005930) -0.6%

Samsung Electronics on Wednesday said first-quarter profit likely rose 44%, with analysts attributing the surge to brisk sales of smartphones and TVs, albeit tempered by a likely fall in chip earnings after a storm halted U.S. output. The South Korean technology giant forecast January-March operating profit of 9.3 trillion won ($8.32 billion), matching a weighted average analyst forecast from Refinitiv SmartEstimate. Analysts said Samsung’s mobile division likely saw operating profit soar more than 1 trillion won to about 4.15 trillion won after its flagship Galaxy S21 smartphone series outsold the previous version by a two-to-one margin in the six weeks since its January launch, according to research provider Counterpoint. A lower starting price for the flagship helped sales for the world’s largest smartphone maker during the quarter, with the S21 priced $200 lower than the S20, Counterpoint said. Profit in Samsung’s television set and home appliance business also likely more than doubled to around 1 trillion won, analysts said, due to continued stay-at-home demand. Cross-town TV and home appliance rival LG Electronics on Wednesday announced its largest-ever preliminary quarterly operating profit of 1.5 trillion won for January-March.

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