Brokerage : Mirae Asset Securities
Analyst : Young-gun Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 370,000 (Downgraded)
Core Momentum : Compelling shareholder return yields and structural valuation discount backed by solid fundamentals and massive FCF generation starting in 2027
📊 1. [Valuation & Key Financial Metrics]
- Trading & Valuation Metrics
- Current Price (as of 2026-07-28): KRW 220,000
- Target Price: KRW 370,000 (Downgraded, -33% from KRW 550,000)
- Investment Rating: BUY (Maintained)
- Upside Potential: 68.2%
- Market Capitalization: KRW 1,286.18 Trillion (KRW 1,286,181 Billion)
- 2026F PER / PBR / ROE: 4.5x / 1.9x / 55.4%
- 2027F PER / PBR / ROE: 3.0x / 1.2x / 50.9%
- 2028F PER / PBR / ROE: 2.7x / 0.9x / 39.1%
- Dividend Yield: 2026F 5.3% (assuming 50% FCF shareholder return: 6.7~9.3% for Common, 9.3~13.0% for Preferred), 2027F 7.5%, 2028F 8.0%
- Annual Financial Outlook (K-IFRS Consolidated / Controlling Interest)
- 2024A: Revenue KRW 300.87T, Operating Profit KRW 32.73T, Net Profit KRW 33.62T
- 2025A: Revenue KRW 333.61T, Operating Profit KRW 43.60T, Net Profit KRW 44.26T
- 2026F: Revenue KRW 720.18T, Operating Profit KRW 397.37T, Net Profit KRW 327.25T
- 2027F: Revenue KRW 951.92T, Operating Profit KRW 575.90T, Net Profit KRW 489.32T
- 2028F: Revenue KRW 1,032.09T, Operating Profit KRW 602.52T, Net Profit KRW 541.24T
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Preliminary Results & Valuation Adjustment
- 2Q26 preliminary revenue reached KRW 171 Trillion (+28% QoQ) and operating profit stood at KRW 89.4 Trillion (+56% QoQ).
- Target multiple was revised downward solely reflecting China’s domestic lithography localization issues following the prior price correction from lower NAND contract prices; however, its potential impact on earnings estimates through 2028 is assessed to be limited.
- Key focal points for the July 30 conference call: 1) LTA contract terms and proportions, 2) memory supply shortage severity in 2027 vs. 2026, 3) 26F/27F HBM shipment growth, and 4) board resolution regarding treasury share buybacks.
- Memory Cycle & ASP Environment
- Memory ASP is anticipated to continue rising into next year, though the pace of increase will decelerate compared to this year.
- Bridging high operational profitability to shareholder value via active shareholder returns and long-term vision is critical during this period.
- Shareholder Return & Structural FCF Growth
- The company holds KRW 18 Trillion in treasury shares acquired in 1Q for employee compensation (average price KRW 183,000–196,000); considering performance-based compensation scales, additional buybacks are deemed necessary.
- The year 2027 is expected to mark the beginning of a full-scale shareholder return expansion. Compared to a 3-year FCF base of KRW 60 Trillion over the past 9 years, cumulative FCF for the 3-year period starting in 2027 is conservatively projected to exceed KRW 800 Trillion, creating room for a substantial increase in baseline dividends.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electronics as a deeply discounted asset whose long-term investment merit is increasingly anchored by massive Free Cash Flow (FCF) generation and structural shareholder return potential, rather than short-term concerns over memory price deceleration or Chinese equipment localization. This perspective considers recent steep stock corrections as an opportunity where fundamental earnings power remains intact while shareholder return yield expands substantially.
To evaluate the progress of this investment thesis, key tracking points include whether 3-year cumulative FCF starting in 2027 actually exceeds the KRW 800 Trillion estimate to support higher regular dividend payouts, the execution of additional treasury share buybacks for performance-based compensation, and management updates on LTA proportions and HBM shipment trajectories during official conference calls. These factors can be confirmed through company earnings releases, IR presentations, and regulatory filings (DART).
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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