[Click eStock] "Samsung Electronics, Q4 is the right time to increase weighting"

Samsung Electronics Valuation 36% Undervalued Compared to Global Competitors
KB Securities "Maintain Samsung Electronics Target Price at 100,000 Won"

[Asia Economy Reporter Gong Byung-sun] There is a growing view that the faster-than-expected depletion of semiconductor inventory will act as a positive factor for Samsung Electronics. Additionally, it is expected to secure growth momentum through large-scale mergers and acquisitions (M&A).

On the 17th, KB Securities maintained its investment opinion of 'Buy' on Samsung Electronics and a target price of 100,000 KRW, presenting it as the top preferred stock in the IT sector for next year. The closing price on the previous day was 71,300 KRW.

In the fourth quarter of this year, Samsung Electronics' semiconductor price negotiations appeared to proceed more smoothly than expected. Initially, it was anticipated that semiconductor price negotiations would be delayed due to strong price resistance from client companies. However, semiconductor inventory was depleted faster than expected, leading North American server companies to focus more on securing volume proactively rather than price reductions in semiconductor price negotiations.

Kim Dong-won, a researcher at KB Securities, stated, "The bottom of DRAM prices will be formed in the first quarter of next year, three months earlier than the initially expected second quarter," and added, "Considering the leading nature of semiconductor companies' stock prices, Samsung Electronics' stock price will confirm its bottom in the fourth quarter of this year."

KB Securities observes that concerns about profit declines next year have already been reflected in Samsung Electronics' stock price. The stock price has undergone adjustments for 10 months, and currently, Samsung Electronics' valuation is 36% undervalued compared to global competitors.

Instead, growth drivers are expected to play their roles starting from the fourth quarter of this year. It is estimated that Samsung Electronics will secure next-generation growth engines by entering new markets such as the metaverse and non-fungible tokens (NFT) using AI (artificial intelligence), in cooperation with semiconductor, display, and wireless business divisions, as well as through large-scale M&A. The operating profit of the non-memory semiconductor sector is also expected to generate an average of over 1 trillion KRW per quarter.

Researcher Kim said, "Currently, Samsung Electronics' stock price appears to have completed its price adjustment," and explained, "The fourth quarter of this year is the right time to increase weighting."

This content was produced with the assistance of AI translation services.