"Samsung Electronics Is a Conviction Buy"...Brokerage Says It Could Reach 600,000 Won, Citing Two Reasons

[Financial News] KB Securities said on the 10th that the scale of Samsung Electronics' new shareholder return policy, which is expected to be announced soon, could range from at least 100 trillion won to as much as 200 trillion won a year. That would be more than 10 times larger than the current annual shareholder return of 9.8 trillion won.

On the day, Kim Dong-won, Research Head at KB Securities, said that even if the shareholder return is set at a minimum of 100 trillion won, the dividend yield based on the current share price could exceed 7%. He added that such a large-scale return could become a key catalyst for a revaluation of the stock.
KB Securities maintained its buy rating and 600,000-won target price for Samsung Electronics, saying it believes the stock is in an aggressive accumulation zone. That implies about 160% upside from the previous session's closing price of 231,000 won.
Earnings are expected to hit record highs for four straight quarters, from the fourth quarter of last year through the third quarter of this year. KB Securities estimated that Samsung Electronics' operating profit in the third quarter of this year would rise 817% from a year earlier to 112 trillion won. The operating margin was forecast at 55%.

The firm said the memory supply shortage is likely to continue for at least three years, through 2028.
Kim said that as of this month, only 60% of big tech clients' memory demand is being met, deepening the supply shortage. He added that since it takes more than three years to complete a new memory fabrication plant, a shortage is unavoidable for at least three years.
He also noted that hyperscalers are now asking for five-year long-term supply agreements (LTA) rather than three-year contracts. They are also requesting a one-year rollover structure on top of the standard five-year deal.
He further said that Samsung Electronics, currently the world's No. 1 DRAM maker, is trading at a 4% discount to Micron in market capitalization, which he described as abnormal even after accounting for the U.S. dollar premium. He added that Samsung Electronics' average selling price for high-bandwidth memory (HBM) is expected to more than double next year from a year earlier, and that its HBM4 market share is projected to rank first at 44%.
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