DS Investment & Securities expects the recovery of the memory semiconductor market and has designated Samsung Electronics as its top pick until April. As a result, it maintained its investment opinion as "buy" and raised the target price to 76,000 won. Samsung Electronics closed at 61,800 won in the previous transaction.
According to DS Investment & Securities, Samsung Electronics' operating profit for the first quarter of this year is estimated to be 4.9 trillion won, a 25% decline compared to the same period last year, which is expected to fall short of market consensus. The ongoing losses due to low utilization rates in the institutional sector and the transition to losses due to NAND inventory adjustments and production cuts are the main reasons.
Nonetheless, Lee Soo-rim, a research institute at DS Investment & Securities, noted, "It is important to recognize that the poor first-quarter performance of Samsung Electronics is already acknowledged in the market" and emphasized, "Due to the early stabilization of memory prices in the second quarter and the increase in LPDDR4 orders within China, we expect the company's performance to trend upward after hitting a low in the first quarter."
Recently, the inventory adjustment of mobile DRAM in China is nearing completion, and following DDR5, DDR4 is also experiencing an increase in spot prices, primarily focusing on LPDDR4. It is determined that CXMT's supply does not fully meet the demand for LPDDR4, which is primarily mounted on medium/low-priced smartphones that are eligible for subsidies.
The research institute stated, "Whether the demand for sets will increase in the second half of the year is still uncertain, but there is a definite perception that prices have entered an upward trend in the first half." It also remarked, "Due to the overall price increase, there is potential for upward revisions in profit estimates for memory companies, and the recovery in the company's profit, driven especially by the sales increase of low-priced smartphones in China, is expected to be strong."
Furthermore, it mentioned, "While it is necessary to examine the actual demand in the second half, it is believed that the current expectations for a legacy rebound remain valid in the short term." It added, "For a sustained upward trend in stock prices, resolving the foundry losses and improving the structure in high-performance memory must accompany it."