[Click eStock] "Samsung Electronics, Box Range Fluctuation Expected Due to Delayed Earnings Improvement... Target Price Down"

Target Price Revised Downward by 12.5% Compared to Previous

On the 27th, KB Securities downgraded the target price of Samsung Electronics from 80,000 KRW to 70,000 KRW, anticipating that the stock price will move within a range for the time being due to delayed earnings improvement. The investment rating was maintained as 'Buy.'

Dongwon Kim, a researcher at KB Securities, stated, "We lowered Samsung Electronics' target price by 12.5% compared to the previous one because we revised down the operating profit for 2024 and 2025 by 4.8% and 16.5%, respectively, to 34.1 trillion KRW and 36.1 trillion KRW." He added, "However, the current stock price at a price-to-book ratio (PBR) of 0.9, which reflects concerns in advance, shows downside rigidity due to share buybacks, so we maintain the investment rating."

Amid continued declines in prices of general-purpose memory caused by weak demand for smartphones and PCs, the expansion of memory production capacity by China's CXMT (Changxin Memory Technologies) is expected to act as a disruptive factor for semiconductor prices in the future. Additionally, the pace of market share expansion of HBM3E, which accounts for 89% of the high-bandwidth memory (HBM) market next year, is slowing due to early market entry by competitors. System LSI earnings are expected to continue to decline due to poor foundry utilization rates. Furthermore, intensified price competition in small- and medium-sized OLEDs is expected to slow the improvement in display earnings.

Researcher Kim analyzed, "Samsung Electronics' Q4 earnings this year are estimated at 76.7 trillion KRW in sales, down 3% from the previous quarter, and operating profit of 7.9 trillion KRW, down 14%, falling short of the consensus operating profit of 9.2 trillion KRW." He added, "In the Device Solutions (DS) division, the memory bit growth guidance and average selling price (ASP) fell short of expectations, while system LSI losses are expected to continue, with increased burdens from bonuses and development costs. The Display (DP) division is expected to show a decline in Q4 operating profit due to price competition in flexible OLEDs despite the peak season."

KB Securities forecasts Samsung Electronics' earnings next year to reach 307.5 trillion KRW in sales, up 1.9% year-on-year, and operating profit to increase by 5.7% to 36.1 trillion KRW.

A range-bound stock price movement is expected for the time being. Researcher Kim said, "Samsung Electronics' stock price is expected to fluctuate within a range due to delayed earnings improvement caused by the slowdown in the general-purpose memory cycle." He added, "The momentum for Samsung Electronics' stock price rebound in the future is expected to come from restoring technological competitiveness in advanced processes, expanding supply of 12-layer HBM3E and early entry into the 6th generation HBM market, and improvement in system LSI earnings due to recovery in foundry utilization rates."

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