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Analyst Research · Translated Summary
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Kyobo Securities | Investment Rating: Buy | Target Price: 500,000 KRW (~$374.81 USD based on 1334 KRW/USD)
- 3Q26 Performance: Achieved all-time high quarterly results with Revenue of 195.4 trillion KRW (~$146.5B USD) and Operating Profit of 107.4 trillion KRW (~$80.5B USD).
- Core Thesis: Sustained memory upcycle driven by HBM4 competitiveness, structural supply constraints in commodity DRAM, and narrowing losses in the Foundry business.
- Financial Outlook: 2026 Operating Profit forecast at 380.4 trillion KRW (~$285.2B USD), growing to 644.2 trillion KRW (~$482.9B USD) in 2027.
Investment Thesis and Target Price
Kyobo Securities maintains a Buy rating and a Target Price of 500,000 KRW (~$374.81 USD based on 1334 KRW/USD). The valuation is supported by three primary pillars:
- HBM4 Leadership: Recovery of competitiveness in HBM4 and expansion of high-value memory sales. HBM4 revenue increased more than 3x QoQ in 3Q26, accounting for 60% of total HBM sales. 2027 HBM supply is effectively sold out at target price levels.
- Structural Supply Constraints: A supply shortage of commodity DRAM is expected to persist into 2027 due to the time lag in new cleanroom mass production and the shift toward HBM capacity. The company aims to secure 60-70% of capacity through Long-Term Agreements (LTA) by 2030.
- Foundry Recovery & Shareholder Returns: Narrowing losses in S.LSI & Foundry, driven by HBM4 base die demand and 2nm customer acquisition. Potential shareholder returns of up to 110 trillion KRW (~$82.5B USD) in 2026 are expected to trigger a valuation re-rating.
Earnings Estimates and Financial Preview
Samsung Electronics recorded record-breaking consolidated results for 3Q26:
- 3Q26 Revenue: 195.4 trillion KRW (~$146.5B USD)
- 3Q26 Operating Profit: 107.4 trillion KRW (~$80.5B USD)
- Memory Segment (DS): The primary growth engine. DRAM and NAND Flash shipments grew +3% and +1% QoQ, respectively. Average Selling Prices (ASP) surged significantly, with DRAM +20% QoQ and NAND +17% QoQ.
- Divisional Performance:
- S.LSI & Foundry: Remaining in deficit, but the loss margin is gradually narrowing.
- MX/Networks & VD/DA: Experienced profitability decline due to increased cost burdens from rising memory prices.
- SDC: Improved performance driven by new product effects and seasonal peak demand.
- Long-term Forecast:
- 2026E Operating Profit: 380.4 trillion KRW (~$285.2B USD), a YoY increase of 773%.
- 2027E Operating Profit: 644.2 trillion KRW (~$482.9B USD), a YoY increase of 60%.
- DRAM Operating Margin: Projected to improve from 80.5% in 2026 to 83.1% in 2027.
Key Semiconductor Drivers and Catalysts
The analyst identifies several critical technological and market catalysts:
- HBM Roadmap: The rapid ramp-up of HBM4 and HBM4E, alongside increasing demand for server-grade DDR5, is the primary driver for DRAM profitability.
- Capacity Shift: The transition of production capacity toward HBM is intentionally constraining the supply of general-purpose DRAM, thereby supporting strong ASP momentum.
- Foundry Catalysts: The expansion of HBM4 base die demand and the securing of 2nm process customers are cited as the key drivers for the Foundry division’s return to profitability.
- Market Positioning: The shift toward LTAs (Long-Term Agreements) for 60-70% of production capacity by 2030 is expected to enhance pricing power and provide high revenue visibility.
🔗 Original Source: View the official filing/article here.