Samsung Electronics' Memory Cycle to Last Longer; Price Target Raised to 630,000 Won

[Financial News] Yuanta Securities Korea maintained its 'buy' rating on Samsung Electronics, saying that favorable conditions in the memory semiconductor industry would persist due to supply constraints even if the pace of memory semiconductor price increases slows somewhat. It raised its price target from 530,000 won to 630,000 won.
Baek Gil-hyun, a researcher at Yuanta Securities Korea, said in a report on the 23rd, "Although the pace of memory semiconductor price increases is expected to slow somewhat, we are focusing on the prospect that tight supply and demand conditions will continue through 2027 and 2028."
Yuanta Securities Korea projected Samsung Electronics' consolidated revenue for the third quarter at 212.192 trillion won. Operating profit was estimated at 99.86 trillion won, up 720.8% from the same period a year earlier. However, that figure was 10.7% below market expectations. Operating profit for the DS division was projected at 100 trillion won.
Operating profit in the memory division and operating loss in the non-memory division were estimated at 102 trillion won and negative 2 trillion won, respectively.
Baek explained, "Considering the pace of memory semiconductor price increases and the full-scale launch of High Bandwidth Memory 4 (HBM4) sales, we estimate quarterly average price growth rates of 18% for DRAM and 16% for NAND flash, respectively."
The loss in the non-memory division is expected to continue.
Baek said, "It is positive that, excluding the impact of provisions for special performance bonuses and considering foundry utilization centered on leading-edge processes, the scale of the loss appears to have decreased meaningfully."
Operating profit in the display division was forecast at 1.1 trillion won, down 9.6% from the same period a year earlier. Despite strong foldable smartphone sales, depreciation and amortization expenses from the mass production of 8.6-generation IT OLED panels and pressure from North American customers to lower prices are expected to weigh on profitability.
Baek forecast, "Profitability is expected to inevitably deteriorate by about 2 percentage points year over year due to depreciation and amortization expenses from the mass production of 8.6-generation IT OLED panels and pressure from North American customers to reduce selling prices."
The DX division was projected to post an operating loss of 1.1 trillion won. As the burden of IT component prices grows, the MX and VD and Home Appliances divisions were estimated to incur losses of 900 billion won and 200 billion won, respectively.
Baek judged, "Given HBM's cannibalization of general-purpose DRAM production capacity and growing demand for high-capacity memory driven by the expansion of AI inference, the resolution of supply constraints is highly likely to come later than expected."
He also saw the possibility of stronger shareholder returns in 2027-2029 if free cash flow expands as the memory upcycle lasts longer. Baek said, "A share-price correction caused by concerns about a peak represents a buying opportunity from a medium- to long-term perspective."
[email protected] Lee Jeong-hwa Reporter