Samsung Electronics' headquarters in Seocho-dong, Gangnam-gu, Seoul. [Yonhap]
Samsung Electronics' headquarters in Seocho-dong, Gangnam-gu, Seoul. [Yonhap]

Samsung Electronics shares fell more than 5 percent Tuesday despite the company posting operating profit of nearly 90 trillion won ($58.8 billion) for the second quarter of this year.

Samsung Electronics — the top stock by market cap on the Kospi — was down 5.66 percent at 300,000 won as of 10:55 a.m. Tuesday, according to Korea Exchange.

The stock opened down 3.46 percent at 307,000 won before sliding as low as 293,000 won during the session.

Samsung released its preliminary second-quarter earnings before the market opened Tuesday, posting record figures, but the announcement triggered a sell-on-news reaction — a phenomenon in which share prices fall even on positive news once the catalyst is priced in.

Samsung reported second-quarter sales of 171 trillion won and operating profit of 89.4 trillion won.

The operating profit figure represents a 1,810 percent increase from the same period a year earlier and surpassed the market consensus of around 84 trillion won.

Excluding performance bonus provisions, Samsung is estimated to have effectively earned more than 106 trillion won in operating profit in the second quarter alone.

SK hynix, the second-largest stock by Kospi market cap, also fell in tandem, trading down 4.23 percent from the previous session at 2.24 million won at the same time. The stock dropped as low as 2.17 million won during the session.

The sharp declines in the two largest Kospi-listed companies pushed the index briefly below the 7,500 level Tuesday.

Despite the selloff, brokerages offered an upbeat outlook for both Samsung Electronics and SK hynix.

Kim Seon-woo, an analyst at Meritz Securities, said earnings releases often prompt investors to interpret undisclosed cost components as sources of uncertainty, fueling either vague fear or unwarranted excitement. "However, since memory chip supply will fall far short of keeping pace with demand growth through at least the fourth quarter of next year, this is not a period to worry about uncertainty from the pre-pricing of earnings improvement," he said. Meritz raised its target price for Samsung to 500,000 won.

Son In-jun, an analyst at Eugene Investment & Securities, forecast Samsung's operating profit at 361.3 trillion won this year and 589.4 trillion won next year. He added that negotiations appear to be under way to raise the average selling price of both commodity DRAM and NAND chips by more than 20 percent in the third quarter, which would lift next year's average selling price estimates and leave further room for upward earnings revisions.

Daishin Securities raised its target price for SK hynix to 3.9 million won. Analyst Ryu Hyeong-geun said a US American Depositary Receipt listing is imminent and the valuation gap with rivals will narrow quickly. "With both earnings and shareholder returns strengthening simultaneously, the stock has entered a phase of maximum appeal," he said.

SK hynix is set to list its American Depositary Receipts on the Nasdaq on Friday. The subscription and payment date is scheduled for Monday, with new depositary receipts set to begin trading on July 29.


jiyun@heraldcorp.com