Brokerage : Mirae Asset Securities
Analyst : Young-gun Kim
Investment Rating : Buy (Maintained)
Target Price : KRW 187,000 (Upgraded)
Core Momentum : Full-year 2026 operating profit is projected to reach KRW 126T (+186% YoY) driven by commodity memory price surges and industry-leading production capacity, lifting the target price by 21% to KRW 187,000 alongside an estimated KRW 46.6T in resources potentially available for special shareholder returns.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy maintained, Target Price upgraded by 21% to KRW 187,000 (Previous KRW 155,000; 34.5% upside potential based on the January 9, 2026 closing price of KRW 139,000)
- Valuation Methodology: Sum-of-the-Parts (SOTP) valuation yielded a target enterprise value of KRW 1,271T (converting to 2026F multiples of 11.6x P/E and 2.6x P/B; remaining lower than the global memory peer average of 14.2x P/E and 3.6x P/B)
- Key Valuation Multiples (2026F): P/E 7.9x, P/B 1.7x, ROE 24.7%, Dividend Yield 1.1% (yield estimated at 4.7% for common and 6.4% for preferred shares assuming a 40% payout from special returns)
- Per-Share Metrics (2026F): EPS KRW 17,554 (YoY +166.2%)
- Annual Financial Projections:
- 2024: Revenue KRW 300.87T, Operating Profit KRW 32.73T, Net Profit (Controlling) KRW 33.62T
- 2025F: Revenue KRW 333.24T, Operating Profit KRW 43.81T, Net Profit (Controlling) KRW 44.47T
- 2026F: Revenue KRW 449.91T (KRW 450T in text, YoY +35%), Operating Profit KRW 125.47T (KRW 126T in text, YoY +186%, OPM 27.9%), Net Profit (Controlling) KRW 118.24T
- 2027F: Revenue KRW 501.29T, Operating Profit KRW 149.89T (OPM 29.9%), Net Profit (Controlling) KRW 144.10T
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Preliminary Earnings Review (Earnings Rally Commences):
- Preliminary Revenue of KRW 93.0T (+8.6% QoQ) and Operating Profit of KRW 20.0T (+67% QoQ)
- Operating Profit by Division: DS KRW 16.7T (+138% QoQ), DX KRW 1.3T (-62.8% QoQ), SDC KRW 1.8T (+50.4% QoQ)
- Memory division contributed KRW 18.0T in profit fueled by strong pricing (DRAM +41%, NAND +25%)
- 2026 Memory Earnings & Production Leadership:
- Memory division operating profit projected to reach KRW 111T (+250% YoY), driving corporate earnings (assuming DRAM/NAND bit growth of +27%/+19% and ASP growth of +59%/+31%)
- Capacity Advantage: 2026F average DRAM wafer capacity estimated at 665K/month (industry-leading 41.5% share among top 3 DRAM makers), maximizing leverage during commodity supply deficits (removed the previously applied 10% peer discount related to HBM weakness)
- Foundry Potential & Special Shareholder Returns:
- Foundry Division: Valued conservatively at KRW 43T (applying a 30% discount), but future catalysts include 4nm HBM4 base die execution, 2nm Exynos 2600 partial adoption in Galaxy S26, Tesla AI chip contracts, and Taylor fab operations
- Special Shareholder Returns: Alongside standard 3-year return framework (50% of FCF, ~KRW 9.8T annually), 2026 special return resources are estimated at KRW 46.6T, potentially yielding an additional KRW 5,080 DPS assuming a 40% payout ratio
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electronics as entering a major memory earnings rally to achieve KRW 126T in 2026 operating profit (+186% YoY), fully leveraging its industry-leading DRAM capacity (41.5% market share) during a prolonged commodity memory deficit despite near-term DX division softness. This perspective places primary emphasis on the removal of the previously applied 10% peer discount related to HBM weakness and the estimated potential for KRW 46.6T in resources available for special shareholder returns, rather than near-term hardware margin pressures.
To verify whether this investment thesis continues to materialize, key verification points include whether realized 2026 DRAM (+59%) and NAND (+31%) ASP gains and operating profit (KRW 126T) meet forecasts, whether advanced foundry catalysts (4nm HBM4 base die and 2nm Exynos 2600) progress as scheduled, and how the actual scale of special shareholder returns and dividend policies are ultimately determined. These developments can be monitored through upcoming quarterly earnings releases, official IR presentations, regulatory filings, and periodic financial reports.
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