Samsung Electronics Sees Strongest Stock Re-Rating in a Decade; Silicon2 Maintains Momentum on European K-Beauty Demand in the Second Half [Stocktopia]

[Financial News] Here is a roundup of major securities-firm reports released on the morning of September 4.
Samsung Electronics is expected to deliver additional shareholder returns, including treasury-share cancellations and higher dividends, within the year. Combined with improving earnings, this could lead to the company’s strongest stock re-rating in a decade.
Silicon2, a cosmetics distributor, is expected to post solid results in the second half as demand for Korean cosmetics grows in Europe. Knowmerce, a performance and fan-platform company, is expected to improve its earnings as overseas tours resume in the second half. However, its target price was lowered to reflect the decline in valuation multiples across the broader market.
◆ Samsung Electronics (005930)— KB Securities / Kim Dong-won, Head of Research
- Target price: KRW 600,000 (maintained) | Previous closing price: KRW 250,000
- Investment opinion: Buy (maintained)
KB Securities maintained its target price of KRW 600,000 for Samsung Electronics, projecting a “KRW 600,000 Samsung Electronics” scenario as additional shareholder returns and improving memory-market conditions are expected within the year.
Kim Dong-won, head of research, said, "If additional shareholder returns within the year and the direction of a strengthened next three-year shareholder-return policy become more concrete, improved earnings and large-scale shareholder returns will coincide. This could lead to the strongest stock re-rating phase in a decade since quarterly dividends began in 2017."
This means that a period of simultaneously increasing dividends and treasury-share cancellations could raise the overall valuation stature of Samsung Electronics’ stock.
Specifically, he forecast KRW 3 trillion in cash dividends in the third quarter, followed by KRW 4 trillion in cash dividends and KRW 4 trillion in treasury-share purchases and cancellations in the fourth quarter. Based on second-half cash dividends, the dividend yield is expected to exceed 4%.
From an earnings perspective, he highlighted the growing share of five-year long-term agreements (LTAs), which account for 70% of memory-capital expenditures. As more major Chinese hyperscalers, including Baidu, Alibaba, and Tencent, join U.S. companies such as Google and Amazon in requesting LTAs, analysts expect the memory shortage to continue at least through 2028. Samsung Electronics is also projected to post record earnings for five consecutive quarters. The foundry business is likewise considered increasingly likely to turn profitable.※ Long-Term Agreement (LTA)An agreement under which a semiconductor manufacturer and a customer commit in advance to volumes and terms over an extended period, such as five years. For manufacturers, this significantly improves earnings predictability because they can build factories based on orders secured in advance.※ HyperscalerA major technology company, such as Google, Amazon, or Microsoft, that operates enormous data centers worldwide. As competition in AI services intensifies, the volume of semiconductors these companies purchase is shaping the direction of the memory market.
◆ Silicon2 (257720)— Korea Investment & Securities / Myung-joo Kim, Researcher
- Target price: KRW 65,000 (raised 8.3%; previous target price: KRW 60,000) | Previous closing price: KRW 48,500
- Investment opinion: Buy (maintained)
Korea Investment & Securities raised its target price for Silicon2 to KRW 65,000, citing expectations for improved earnings driven by growing demand for Korean cosmetics in Europe.
Researcher Myung-joo Kim noted, "As of the second quarter, Silicon2’s largest customer is Boots, a leading retailer in the United Kingdom," adding, "Given the recent rise in the popularity of Korean cosmetics in the U.K., sales to Boots are expected to continue increasing in the second half."
This suggests that European sales will continue to grow, using the U.K., where a key customer has been established, as a foothold. Offline distribution of Korean cosmetics in Europe is gaining momentum this year, and the company is also considered highly likely to secure new customers such as Douglas, a major German cosmetics retailer. However, a sustained strengthening of the Korean won could negatively affect earnings.
Kim forecast, "Although the cosmetics sector may undergo a healthy correction in September, Silicon2’s valuation is attractive, making it a safe investment in the sector."
◆ Knowmerce (473980)— Shinhan Investment & Securities / Heo Seonggyu, Senior Researcher
- Target price: KRW 16,500 (lowered 38.9%; previous target price: KRW 27,000) | Previous closing price: KRW 11,140
- Investment opinion: Buy (maintained)
In its report titled “The Second Half Proves It with Numbers,” Shinhan Investment & Securities said Knowmerce is expected to improve its earnings as overseas tours resume and its fan platform grows in the second half. However, it lowered the target price to KRW 16,500 to reflect the decline in valuation multiples across the broader market.
The company struggled in the second quarter because of the absence of large-scale concerts and one-off legal expenses. From the third quarter, however, revenue is expected to rise again as global performances, including WOODZ’s and Jay B’s North American tours, are concentrated in the period.
Regarding the KRW 40 billion convertible bond (CB) recently issued by the company and its plan to secure intellectual property (IP) rights from major artists, Senior Researcher Heo Seonggyu said, "The KRW 40 billion CB issuance is capital raised to pay guarantees for securing major IP rights in the future, not to cover accounts receivable." He added, "We expect annual revenue estimates to trend upward, but lowered the target price because of the decline in multiples across the broader market. There remains room for a re-rating later depending on changes in market conditions."
The target price was lowered not because the company’s earnings deteriorated, but because the price the market is willing to pay has declined. If sentiment changes, there is room for the target price to rise again.※ Convertible Bond (CB)A corporate bond that comes with the right to be converted into shares later at a predetermined price. Companies can raise funds at relatively low interest rates, but the issuance may weigh on the stock because existing shareholders’ stakes can be diluted when the bonds are converted into shares.※ MultipleA ratio showing how many times the market values one unit of a company’s earnings. Even if earnings remain unchanged, the ratio can fall when market sentiment cools, causing both the target price and the stock price to decline.

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