Moody’s revises up Samsung Elec’s rating to Aa3 from A1, outlook stable

2018.06.21 14:17:25 | 2018.06.21 15:48:15

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Moody’s Investor Service on Wednesday upgraded Samsung Electronics Co.’s senior unsecured debt rating by one notch to Aa3 from A1 with a stable outlook on expectations that the South Korean tech giant would continue to lead the market across its mainstay business sectors.

“The upgrade reflects Samsung`s improved operating stability and robust cash flow, which are supported by its solidifying technological and commercial leadership in its key segments, as well as its exceptionally strong financial buffers against high capex needs and industry cyclicality," Gloria Tsuen, a Moody`s Vice President and Senior Analyst, says in a press release.

“Moody`s expects that SEC`s strong brand and technological advantage will continue to drive the company`s leading market positions and high profitability across multiple segments at least over the next two to three years,” the global credit rating agency adds.

Shares of Samsung Electronics rose 0.11 percent to close Thursday at 47,050 won.

In particular, Moody’s forecast Samsung Electronics’ mainstay memory chip business will continue to drive its earnings and cash flow in the next few years, thanks to its strong technology leadership, eased competition following the industry consolidation and insatiable demand.

Moody’s projected Samsung Electronics’ adjusted cash flow from operation would average around 59 trillion won ($53.2 billion) over the next two to three years, compared with 47 trillion won between 2013 and 2017. Along with it, the rating company expected the global chip giant’s average adjusted operating margins to stay at around 19 percent over the same period, higher than 16 percent between 2013 and 2017.

Tsuen did not expect the government-led aggressive investment in Chinese semiconductor companies would pose a significant threat to Samsung Electronics, suggesting Samsung Electronics could maintain its leadership in the global chip industry for the next three to five years.

The global credit rating company assigned stable outlook to Samsung Electronics on expectations for the company’s “strong technological and commercial leadership in its key segments, strong profitability and cash flows, and financial prudence.”

By Chun Kyung-woon and Choi Mira

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