Brokerage : Hyundai Motor Securities (Analyst: Greg Noh, RA: Gayoung Yoon)
Investment Rating : BUY (Maintained)
Target Price : KRW 440,000 (Maintained)
Core Momentum : Firm valuation support expected driven by persistent DRAM and NAND supply bottlenecks, enhanced downcycle defensiveness via strengthened LTAs, and memory generating 97% of full-year operating profit
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY maintained, 6-month Target Price maintained at KRW 440,000 (derived from the arithmetic average of 2026E P/E 10.5x and P/B 3.0x; current price KRW 339,500 as of 2026.06.26, upside potential 29.6%)
- Earnings Forecast Summary:
- 2024A: Revenue KRW 300.9T, Operating Profit KRW 32.7T, Net Profit KRW 33.6T
- 2025A: Revenue KRW 333.6T, Operating Profit KRW 43.6T, Net Profit KRW 44.3T
- 2026F: Revenue KRW 753.6T, Operating Profit KRW 357.6T (revised down by 3.9%), Net Profit KRW 308.3T
- 2027F: Revenue KRW 930.8T, Operating Profit KRW 453.7T, Net Profit KRW 399.7T
- 2028F: Revenue KRW 1,065.6T, Operating Profit KRW 493.4T, Net Profit KRW 445.5T
- Valuation Multiples & Financial Indicators:
- EPS: 2025A KRW 7,241 → 2026F KRW 52,330 (lowered from KRW 54,455) → 2027F KRW 68,134 (lowered from KRW 68,696) → 2028F KRW 75,978
- P/E: 2025A 16.6x → 2026F 6.5x → 2027F 5.0x → 2028F 4.5x
- P/B: 2025A 1.9x → 2026F 3.1x → 2027F 2.0x → 2028F 1.5x
- ROE: 2025A 10.8% → 2026F 53.8% → 2027F 43.7% → 2028F 33.6%
- EV/EBITDA: 2025A 7.6x → 2026F 4.3x → 2027F 2.8x → 2028F 1.8x
- Dividend Yield: 2025A 1.4% → 2026F 0.5% → 2027F 0.5% → 2028F 0.5%
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Earnings Outlook:
- Consolidated revenue projected at KRW 179.7T and operating profit at KRW 81.3T (-12.2% vs. prior estimate).
- 2Q26 absorbs full unreflected 1Q incentive bonus provisions alongside margin compression in finished goods divisions (MX) caused by surging memory component prices.
- Segment Structure & Valuation Rationale:
- Full-year 2026 operating profit revised down slightly by 3.9% to KRW 357.6T following finished goods margin adjustments.
- However, with memory generating 97% of total operating profit this year, the company’s earnings profile from an operating profit perspective is similar to pure memory players, warranting no valuation discount against standalone memory peers.
- Industry Dynamics & Downcycle Comparison:
- Supply Bottlenecks: DRAM supply bottlenecks are expected to ease only gradually starting in 2H28 despite greenfield investments; NAND greenfield expansion remains minimal, keeping downside risks to memory prices low.
- Down-Cycle Protection via LTAs: Unlike the 2018 cloud cycle where earnings growth slowed and share prices corrected, structural downturns are unlikely to repeat identically given the downside protection provided by strengthened Long-Term Agreements (LTAs).
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electronics as a company whose operating profit profile closely aligns with pure memory players—with memory generating 97% of full-year operating profit—which offsets lump-sum bonus provisions and set division margin compression. This perspective places primary importance on persistent structural supply bottlenecks in DRAM and NAND, downside cycle protection via strengthened LTAs, and the unwarranted nature of a valuation discount relative to pure memory peers, rather than temporary finished goods margin headwinds.
To verify whether this investment thesis continues to materialize, key tracking points include the rebound trajectory of quarterly memory operating profits following the 2Q bonus provision absorption, whether strengthened LTA structures provide tangible earnings and price stabilization unlike past cycles, and the ongoing duration of DRAM and NAND supply bottlenecks. These developments can be confirmed through upcoming quarterly earnings releases, periodic financial filings, and official company IR materials.
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