"Buy Samsung at 260,000 won and SK hynix at 1.6 million won even today," says the brokerage industry... "The semiconductor cycle will beat high oil prices"

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[Financial News] As Samsung Electronics and SK hynix ride the supercycle in artificial intelligence (AI) semiconductors and post record-setting gains, individual investors are still weighing whether to chase the rally.
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According to the Korea Exchange (KRX) on the 7th, Samsung Electronics and SK hynix, the No. 1 and No. 2 companies by market capitalization on the KOSPI Composite Index and the two semiconductor leaders, had both risen more than 100% so far this year through the 6th.
Samsung Electronics rose 121.85% from 119,900 won at the end of last year to 266,000 won on the 6th. SK hynix also climbed 145.93% over the same period, from 651,000 won to 1,601,000 won. Both stocks have more than doubled compared with last year.
As the two stocks, which account for nearly half of the KOSPI Composite Index's market value, surged, the index also gained momentum. The KOSPI Composite Index, which reached the 7,000-point level for the first time ever, briefly broke above 7,400 on the 6th before closing in the 7,300 range.
With the rally showing such explosive strength, brokerages are also raising their target prices almost daily. The highest target price currently offered by securities firms is 390,000 won for Samsung Electronics from Daol Investment & Securities and 2.34 million won for SK hynix from Nomura Securities. Korea Investment & Securities, Eugene Investment & Securities, and Yuanta Securities Korea have also recently raised their target prices for Samsung Electronics one after another.
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For SK hynix, Eugene Investment & Securities set the highest target price among domestic brokerages at 2.3 million won. Daol Securities, Korea Investment & Securities, Mirae Asset Securities, KB Securities, and Meritz Securities also raised their target prices, setting them at 2.1 million won, 2.05 million won, and 2 million won respectively.
The prevailing view is that the historic rise in memory semiconductor prices will drive earnings growth at both companies. Brokerages expect next year's operating profit consensus to reach 417.6172 trillion won for Samsung Electronics and 335.7838 trillion won for SK hynix. Combined, that comes to 753.401 trillion won, about 30% higher than this year's consensus of 579.4477 trillion won, which includes 332.1079 trillion won for Samsung Electronics and 247.3398 trillion won for SK hynix.
Expectations that the two companies' combined operating profit next year could approach 1,000 trillion won are also a major reason behind the rising hopes for their share prices. In March, Macquarie Securities projected combined operating profit of 924 trillion won for the two companies next year, while Eugene Investment & Securities also put the figure at around 931 trillion won.
Kim Jae-seung, an analyst at Hyundai Motor Securities, said, "Strong growth in AI demand was confirmed during the first-quarter earnings season for U.S. hyperscalers last week." He added, "Korean semiconductor companies are the sector most directly benefiting from capital spending tied to rising AI inference demand, and increased capex by hyperscalers will translate into higher sales for Samsung Electronics and SK hynix."
Park Sang-hyun, an analyst at iM Securities, said, "The semiconductor industry cycle is outperforming the high oil price environment." He added, "Since the gap between the semiconductor price growth rate and the oil price growth rate, a proxy indicator for Korea's terms of trade, is likely to remain positive for a considerable period, the domestic economy and stock market are expected to maintain strong upward momentum in the second half of the year."
bng@fnnews.com Kim Hee-sun Reporter