Brokerage : iM Securities
Analyst : Myung-sub Song
Investment Rating : Buy (Maintained)
Target Price : KRW 280,000 (Upgraded)
Core Momentum : Annual earnings estimates are revised upward with strong ROE projections driven by higher 2Q DRAM and NAND ASP assumptions, while the early resolution of the war in Iran remains the critical determinant for valuation multiples.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy maintained, Target Price upgraded to KRW 280,000 (67.5% upside potential based on the March 31, 2026 closing price of KRW 167,200)
- Valuation Methodology: Applied a peak historical P/B multiple of 3.0x to the FY26 expected BPS of ~KRW 90,000 based on an expected FY26 ROE of 39% exceeding historical peaks (conditioned on an early end to the war in Iran)
- Key Valuation Multiples (2026E): P/E 5.7x, P/B 1.9x, ROE 39.5%, EV/EBITDA 2.5x, Dividend Yield 0.9%
- Per-Share Metrics (2026E): EPS KRW 30,797, BPS KRW 93,053
- Annual Financial Projections:
- 2025: Revenue KRW 333.61T, Operating Profit KRW 43.60T, Net Profit KRW 44.26T
- 2026E (Summary Financial Table): Revenue KRW 593.79T, Operating Profit KRW 272.38T (Text estimate KRW 272.4T), Net Profit KRW 207.44T
- 2027E: Revenue KRW 534.41T, Operating Profit KRW 196.67T, Net Profit KRW 156.63T
- 2028E: Revenue KRW 587.85T, Operating Profit KRW 216.73T, Net Profit KRW 175.79T
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Estimates:
- Revenue estimated at KRW 125.2T (+33% QoQ) and Operating Profit at KRW 45.3T (+126% QoQ), propelled by surging memory prices and favorable KRW/USD exchange rates
- Operating Profit by Segment: Memory KRW 44.7T, SDC KRW 0.4T, MX/NW KRW 1.4T, CE (including Harman) KRW 82B, System LSI expected to remain at previous quarter’s loss level (Set margins impacted by memory cost inflation)
- 2Q26 & 2026 Outlook:
- ASP Growth Upgrades: 2Q26 DRAM and NAND ASP increase estimates raised to 33% and 37%, respectively
- Earnings Upgrades: Operating profit estimates revised upward to KRW 70.0T for 2Q26 and KRW 272.4T for FY26
- Labor Cost Variable: Potential minor downward adjustments to earnings, BPS, and ROE depending on the new employee compensation scheme expected to be determined around the May strike
- Geopolitical Risks & Market Dynamics:
- Memory industry momentum remains solid despite component pricing pressures on downstream sets
- A prolonged war in Iran presents downside risks to AI investments and memory demand, which would necessitate downward adjustments to target multiples
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electronics as a memory-led earnings grower generating an elevated ROE of around 39% with FY26 operating profit revised up to KRW 272.4T, driven by upwardly revised DRAM and NAND ASP projections and resilient industry fundamentals despite set-division cost pressures. This perspective places primary weight on rapid earnings expansion fueled by memory pricing strength, while highlighting the duration of the war in Iran as the pivotal macro factor dictating valuation multiple sustainability.
To verify whether this investment thesis continues to materialize, key verification points include whether realized 2Q DRAM (+33%) and NAND (+37%) ASP increases and operating profit (KRW 70.0T) meet revised targets, the potential impact on future earnings, BPS, and ROE from the new employee compensation scheme expected to be determined around the May strike, and how geopolitical developments in Iran affect broader AI investments and memory market demand. These metrics can be monitored through future quarterly earnings releases, official IR presentations, regulatory filings, and global macroeconomic indicators.
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