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An employee of South Korean mobile carrier KT holds a Samsung Electronics' Galaxy tablet 10.1 (R) and Apple Inc's iPad at a registration desk at KT's headquarters in Seoul, in this August 10, 2011 file photo.JO YONG-HAK/Reuters

Samsung Electronics is shaping up as a credible challenger to Apple. Yet investors value the $170-billion (U.S.) company more like a lemon. Even as Samsung estimated on Friday that it made a record $5.9-billion in operating profit in the second quarter, shares in the Korean firm slipped 2 per cent. Samsung deserves more credit.

There are some distractions. Samsung's lower margin businesses, like making TVs and home appliances, are at risk from weak demand in the troubled euro zone in particular. And there have been worries – probably overdone – about the potential impact on its chip sales if Apple starts buying key components for its iPhones and iPads elsewhere. The company's estimate for second-quarter revenue fell just short of expectations.

Yet the Korean giant's mobile device business is arguably the closest rival anywhere to the U.S. smartphone giant.

Eyeball the commuters in early-adopting, tech-savvy cities like Hong Kong, and Samsung's latest gadgets are everywhere. The Galaxy S III smartphone is in great demand and therefore in short supply, the kind of "problem" the Silicon Valley firm sometimes has. And Samsung's brand just came out on top in Asia in a new ranking by Campaign Asia-Pacific, with Apple as the runner-up.

The mobile division is the powerhouse behind Samsung's growth. The company's overall second-quarter operating profit was up nearly 80 per cent on last year.

Instead of being rewarded for that growth, Samsung has developed another problem shared to a lesser extent by Apple: It looks undervalued.

Samsung's shares trade at just over seven times the coming 12 months of earnings, as estimated by Thomson Reuters' StarMine. That's only half the median multiple of its sector, albeit that includes companies with a range of business models. Apple trades at just over 11 times estimated earnings, and even that doesn't fully reflect its surging growth.

Maybe investors are confused by the combination of an Asian Apple with Samsung's more mundane businesses. Whatever the reason, they may be missing the wood for the trees.