Generous Love of 6 Million Ants for 'Samsung Electronics,' Must Buy to Survive... "Stock Market Predicts 50,000 Won Samsung, Buy More"

Securities Firms Raise Target Prices, Recommend Buying Dips in Portions During Stock Price Corrections

[Asia Economy Reporter Lee Seon-ae] The love of individual investors for Samsung Electronics, the top KOSPI stock in South Korea, remained unwavering. Despite the stock price continuously falling due to market downturns and industry concerns, turning it into a "50,000-won stock," investors diligently bought shares, expressing even greater affection. Moreover, despite many investors exiting the stock market, the number of Samsung Electronics shareholders surpassed 6 million for the first time. Samsung Electronics was also the top net purchase stock so far this year. Even though Samsung Electronics recorded an "earnings shock" with its third-quarter operating profit plunging more than 30% year-on-year due to the worsening memory semiconductor industry, securities firms raised their target prices for Samsung Electronics and recommended buying, which is seen as the driving force behind the net purchases.

On the 3rd, Samsung Electronics disclosed at its shareholders' meeting that the total number of shareholders as of the 19th of last month was 6,014,851. This is an increase of 92,041 shareholders in three months from 5,922,810 shareholders as of the end of June. Compared to the year-end figure (5,066,466), the number has grown by nearly 950,000 this year alone. Small shareholders holding less than 1% of shares numbered 5,922,693 as of the first half of the year. Although the number of small shareholders was not separately announced at the extraordinary general meeting, it is estimated to have exceeded 6 million.

The love of 6 million retail investors was substantial. Despite Samsung Electronics' stock price falling about 24% from the beginning of the year until the day before, they showed unwavering confidence through large-scale purchases. The stock price decline of Samsung Electronics was greater than the 21.5% drop in the KOSPI during the same period. This was due to the accumulation of semiconductor inventory and demand slowdown, which affected the entire industry. According to Statistics Korea, the semiconductor inventory index for the third quarter of this year was 237.1, a sharp increase of 17.4% compared to the previous quarter.

Individuals have been the largest net buyers of Samsung Electronics so far this year, purchasing a whopping 16.3887 trillion won. This is interpreted as buying at the bottom amid the price decline, taking the "50,000-won stock" as a low-price buying opportunity. On the other hand, foreigners and institutions were net sellers of 8.5747 trillion won and 8.2554 trillion won, respectively.

The favorable outlook from securities firms appears to be continuously driving net purchases. Recently, some securities companies have raised their target prices for Samsung Electronics and issued bullish forecasts. NH Investment & Securities raised Samsung Electronics' target price from 67,000 won to 72,000 won. Daol Investment & Securities also slightly raised the target price from 68,000 won to 69,000 won.

Researcher Doh Hyun-woo of NH Investment & Securities explained the target price increase, saying, "We are raising the 2024 earnings estimates and changing the valuation base year to 2023." He added, "Due to memory companies' reduced capital expenditures in 2023, a shortage of memory semiconductors is expected in 2024, and the profit increase will be larger than previously anticipated." This reflects the view that market conditions could improve as memory companies cut production and reduce investments. This decision is expected to have a positive impact on Samsung Electronics.

Researcher Kim Yang-jae of Daol Investment & Securities said, "Samsung Electronics, which has market dominance and cost competitiveness, is expanding capital investment without production cuts despite the slowdown in the memory industry, unlike competitors." He added, "This is not a resumption of a chicken game but a move to secure mid- to long-term business stability, and we recommend increasing holdings when the stock price shows weakness due to related concerns."

This means that they recommend buying in increments at low points during price adjustments, expecting the fruits of proactive investment when the industry recovers.

Researcher Wi Min-bok of Daishin Securities said, "Unlike competitors, Samsung Electronics is expanding market share without reducing memory investments." He added, "With cost advantages in both DRAM and NAND and sufficient cash reserves, expanding market share is considered a superior strategy."

However, many forecasts suggest that the stock price rebound may only be possible by the second quarter of next year. From a long-term perspective, positive outlooks prevail. Researcher Baek Gil-hyun of Yuanta Securities explained, "Considering memory semiconductor suppliers' production cut plans, the inventory peak-out is likely to occur after the fourth quarter, which will be positive for Samsung Electronics' stock price in the short term." He added, "From a mid- to long-term perspective, stable memory semiconductor business profitability compared to competitors and the emphasis on technology leadership centered on extreme ultraviolet (EUV) processes are expected to act as momentum for corporate value growth."

Researcher Eo Gyu-jin of DB Financial Investment said, "Samsung Electronics' earnings decline due to the semiconductor industry's downturn is expected to continue for a while." However, he noted, "On the other hand, due to the industry's downturn and increased equipment lead times (time from order to delivery), memory companies' new investments are limited, meaning supply growth is restricted. The lowered memory prices will induce shipment increases, and a memory industry rebound is expected after the third quarter of next year."

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