Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Yuanta Securities | Investment Rating: Buy | Target Price: 690,000 KRW (~$517 USD)
- 3Q26 Performance: Record-breaking results for four consecutive quarters, with Operating Profit reaching 107.5 trillion KRW (~$80.6B USD).
- 4Q26 Outlook: Operating Profit forecast at 137.3 trillion KRW (~$103B USD), significantly exceeding market consensus.
- Core Thesis: Strong visibility through 2028 driven by HBM4 expansion, Long-Term Agreements (LTAs) with 10+ major clients, and robust server demand for AI infrastructure.
Investment Thesis and Target Price
Yuanta Securities has maintained a Buy rating and raised the Target Price to 690,000 KRW (~$517 USD) from the previous 630,000 KRW (~$472 USD). This valuation is based on the 2027 estimated Book Value Per Share (BPS) multiplied by a Target PBR of 3.5x.
The analyst notes that earnings visibility has increased significantly compared to previous cycles. This is supported by the completion of Long-Term Agreements (LTAs) with 10 large-scale customers, with negotiations ongoing with another 10. Furthermore, HBM volumes for 2027 are already sold out at target price levels. While capital intensity remains high due to the Foundry business and an expected 2027 CAPEX of 108.0 trillion KRW (~$81B USD), the company’s strong Free Cash Flow (FCF) from the memory business is expected to fuel a new shareholder return policy in late January 2027.
Earnings Estimates and Financial Preview
3Q26 Actuals:
- Revenue: 195.3 trillion KRW (~$146.6B USD), YoY +126.9%, QoQ +13.9%.
- Operating Profit: 107.5 trillion KRW (~$80.6B USD), YoY +783.6%, QoQ +20.1% (OPM 55.0%).
- Drivers: Despite a negative currency effect of approx. 10 trillion KRW (~$7.5B USD) QoQ, results were driven by price hikes in server applications and HBM4 sales. DRAM shipments and prices rose +3% and +21% QoQ, respectively; NAND shipments and prices rose +4% and +18% QoQ.
4Q26 Forecast:
- Revenue: 258.0 trillion KRW (~$193.4B USD), YoY +174.9%, QoQ +32.1%.
- Operating Profit: 137.3 trillion KRW (~$103B USD), YoY +583.8%, QoQ +27.7% (OPM 53.2%).
- Comparison: These estimates are 26.7% and 18.4% higher than the 1-month market consensus for revenue and operating profit, respectively.
- Segment View: Memory is expected to grow via 16% (DRAM) and 14% (NAND) shipment increases QoQ. Conversely, the DX division is expected to see a slight increase in losses due to persistent cost burdens.
Long-term Forecast: 2027 total company operating profit is estimated at 749.7 trillion KRW (~$562B USD), a YoY increase of 91.5%.
Key Semiconductor Drivers and Catalysts
- HBM4 & Next-Gen Roadmap: 3Q26 HBM4 revenue increased more than 3x QoQ, accounting for 60% of total HBM sales. HBM4E samples were shipped in May with positive customer feedback. The company expects tight supply to persist through 2028 due to the increased die size and metal layers of HBM4E/HBM5, which limits bit production conversion from conventional DRAM.
- Agentic AI & NAND Demand: The rise of Agentic AI is driving demand for high-performance, high-capacity TLC SSDs (for KV cache) and QLC SSDs (for virtual user physical storage). A 256TB product based on V9 2Tb QLC with 32-layer stacking is slated for commercialization in early 2027.
- Foundry & Advanced Nodes: 2nm project wins from large CSP and AI/HPC customers have more than doubled YoY. HPC revenue is projected to exceed 50% of total Foundry revenue by 2027. Expansion of new fabs in the US (Taylor) and Korea is underway to meet the surge in 2nm demand.
🔗 Original Source: View the official filing/article here.