Brokerage : iM Securities
Analyst : Myung-sub Song
Investment Rating : Buy (Maintain)
Target Price : KRW 180,000 (Upgraded)
Core Momentum : Full-year 2026 operating profit is projected to reach KRW 137.9T (+217% YoY), supported by a complete recovery in HBM competitiveness with late-1Q26 shipments of 1c-based HBM4 and steep commodity memory ASP increases, lifting the target price to KRW 180,000.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy maintained, 12-Month Target Price upgraded to KRW 180,000 (29.7% upside potential based on the January 8, 2026 closing price of KRW 138,800)
- Valuation Methodology: Applied a 10-year historical peak P/B multiple of 2.2x to FY26 estimated BPS of KRW 81,039, reflecting 1c node/HBM4 competitiveness recovery and FY26 ROE reaching historical peak levels (projected at 22% in text, 21.6% in table)
- Key Valuation Multiples (2026E): P/E 9.0x, P/B 1.7x, ROE 21.6% (22% in text), EV/EBITDA 3.0x, Dividend Yield 1.0%
- Per-Share Metrics (2026E): EPS KRW 15,701 (YoY +183.9%), BPS KRW 81,039
- Annual Financial Projections:
- 2024: Revenue KRW 300.87T, Operating Profit KRW 32.73T, Net Profit KRW 33.62T
- 2025E: Revenue KRW 332.78T, Operating Profit KRW 43.51T, Net Profit KRW 37.99T
- 2026E: Revenue KRW 431.25T, Operating Profit KRW 137.01T (KRW 137.9T in text, YoY +217%), Net Profit KRW 105.85T
- 2027E: Revenue KRW 391.61T, Operating Profit KRW 110.05T, Net Profit KRW 88.13T
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Preliminary Earnings Review (Memory-Led Beat):
- Preliminary Revenue of KRW 93T and Operating Profit of KRW 20T, slightly exceeding iM’s operating profit estimate (KRW 19T)
- Segment Details: Memory (DRAM ASP up in the high-30% range QoQ, generating an estimated KRW 17.9T operating profit) and SDC (KRW 2.0T on FX benefits and premium client shipments) drove earnings. In contrast, MX/NW posted KRW 1.6T due to memory BOM cost inflation, while CE recorded an operating loss on China weakness
- 1Q26 Earnings Outlook (Operating Profit of KRW 28.1T):
- Contract price increases projected at +30~40% QoQ for Conventional DRAM and +10~20% QoQ for NAND
- Memory Operating Profit: Estimated at KRW 25.9T (+45% QoQ)
- Downstream Headwinds: MX/NW is unlikely to exhibit typical 1Q strength due to memory BOM inflation, with lower contribution from Galaxy S26 leading to earnings declines
- HBM Full Recovery & DRAM Multi-Year Agreements:
- HBM4 Momentum: Featuring the industry’s fastest 1c node adoption, HBM4 shipments to the lead customer are scheduled to begin in late 1Q26, signaling full recovery in HBM competitiveness
- Multi-Year Contracts: Some clients are requesting long-term agreements for up to 3 years with minimum volume/value conditions, underscoring severe supply deficits and improving medium-term price stability
- Potential Risk Factors (BOM Cost Burdens):
- DRAM BOM cost ratio reached 9.9% in December (above historical average of 5.4%), and 1Q26 price hikes could push it past the 2010 historical high of 12.7%
- Set OEMs and server makers are raising end-product prices and reducing DRAM density per device, requiring monitoring for potential post-restocking demand moderation
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electronics as an enterprise poised to achieve KRW 28.1T in 1Q26 operating profit and KRW 137.9T in FY26 operating profit (+217% YoY)—driven by the late-1Q26 launch of 1c-based HBM4 shipments to its lead customer and steep commodity DRAM/NAND price increases—which outweighs margin contraction in downstream consumer set divisions (MX/CE) caused by memory BOM inflation. This perspective places primary emphasis on the complete recovery of HBM competitiveness via 1c node adoption and the justification of applying a 10-year historical peak P/B multiple (2.2x) supported by peak FY26 ROE, rather than near-term hardware margin headwinds.
To verify whether this investment thesis continues to materialize, key verification points include whether realized 1Q consolidated operating profit (KRW 28.1T) and Memory operating profit (KRW 25.9T) meet forecasts, whether 1c HBM4 shipments commence on schedule to the lead customer in late 1Q26, whether multi-year contract structures successfully stabilize pricing, and whether downstream set OEM density reductions trigger broader demand moderation. These developments can be monitored through upcoming quarterly earnings releases, official IR presentations, regulatory filings, and periodic financial reports.
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