Brokerage : Mirae Asset Securities
Analyst : Younggun Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 320,000 (Upgraded)
Core Momentum : Target price raised based on high demand visibility from global big tech CapEx growth and memory LTAs, coupled with significant valuation discounts across advanced-node foundry operations.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY maintained; Target Price raised by +7% to KRW 320,000 from KRW 300,000 (45.1% upside potential based on April 30, 2026 closing price of KRW 220,500)
- Valuation Methodology: Derived via Sum-of-the-Parts (SOTP); the Target Price implies a 12MF P/B of 3.1x and P/E of 7.9x, representing an absolute low compared to historical multiples and industry peers
- Foundry Division Value: The implied foundry business value stands at only KRW 73T in the current target price, effectively excluding advanced accomplishments such as 4nm LPU for Nvidia, 2nm AI chip orders for Tesla, and 4nm HBM4 base dies
- Valuation Multiples (Current Price): 2026F P/E 5.5x, P/B 2.1x
- Key Financial Metrics & Forecasts (2024 ~ 2028F):
- 2024: Revenue KRW 300.87T, OP KRW 32.73T, Net Profit KRW 33.62T, EPS KRW 4,950, ROE 9.0%, P/E 10.7x, P/B 0.9x, Div. Yield 2.7%
- 2025: Revenue KRW 333.61T, OP KRW 43.60T, Net Profit KRW 44.26T, EPS KRW 6,564, ROE 10.8%, P/E 18.3x, P/B 1.9x, Div. Yield 1.4%
- 2026F: Revenue KRW 664.26T, OP KRW 328.58T (vs. consensus KRW 317.23T), Net Profit KRW 271.28T, EPS KRW 40,275, ROE 48.4%, P/E 5.5x, P/B 2.1x, Div. Yield 4.7%
- 2027F: Revenue KRW 844.32T, OP KRW 444.84T, Net Profit KRW 375.73T, EPS KRW 55,783, ROE 44.2%, P/E 4.0x, P/B 1.5x, Div. Yield 3.9%
- 2028F: Revenue KRW 912.65T, OP KRW 456.32T, Net Profit KRW 409.62T, EPS KRW 60,814, ROE 34.6%, P/E 3.6x, P/B 1.1x, Div. Yield 3.9%
🚀 2. [Market Opportunities & Business Outlook]
- Big Tech CapEx Upward Revisions & LTA Expansion:
- 2026 global hyperscaler CapEx revised up to $806B (+73.0% YoY), with continued investment expansion projected for 2027
- Given massive AI order backlogs, downside risk to hyperscaler CapEx remains limited
- Official disclosure of initial memory Long-Term Agreements (LTAs) indicates an industry-wide shift toward long-term contracts similar to Sandisk’s benchmarks
- 2Q26 Business Outlook:
- Revenue projected at KRW 155T (+16% QoQ) and Operating Profit at KRW 75T (+30% QoQ)
- Memory Segment: DRAM ASP +23% / B/G +7%, NAND ASP +30% / B/G +3%, with DS division operating profit reaching KRW 72.5T to drive total earnings
- DX Division: OPM expected to decline to 2.3% (-5.3%pt YoY) due to rising component purchase costs
- 2027 Earnings Upgrade & Operational Assessment:
- 2027 Operating Profit forecast revised up by +5.2% to KRW 445T, factoring in continued memory price increases (DRAM and NAND +14% each)
- DS division 2026F/2027F OPM estimates adjusted down by 3.5%pt to reflect labor bonus provisions, though this is deemed a temporary non-structural factor
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electronics as a market leader backed by structural demand visibility from global hyperscaler AI CapEx expansion and long-term supply agreements (LTAs), comfortably overcoming temporary margin dilution from set division cost pressures and labor bonus discussions. This perspective highlights the severe undervaluation of the company’s advanced foundry achievements (4nm/2nm client wins) within current valuations, alongside the upward earnings trajectory projected through 2027.
To assess whether this investment thesis unfolds as anticipated, key verification checkpoints include the formalization of additional client LTAs across the memory portfolio, the sustained sequential realization of memory ASP gains through 2027, and the successful commercial execution and mass production of advanced 4nm and 2nm foundry orders. These milestones can be tracked through subsequent quarterly earnings releases, official IR presentations, and regulatory filings on DART/KRX.
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