KB Securities noted that Samsung Electronics' demand is expected to improve and has presented it as the top pick in the semiconductor sector. It raised the target stock price from 70,000 won to 82,000 won while maintaining its investment opinion of 'buy.' The closing price of Samsung Electronics on the most recent trading day, the 28th, was 60,200 won.
On the 31st, Kim Dong-won, a researcher at KB Securities, said, “The upward revision of Samsung Electronics' target stock price reflects supply and demand improvement and price increases due to entering the memory upswing cycle from the second quarter.” He projected this year's and next year's operating profits at 35.1 trillion won, an increase of 10.4% compared to previous estimates, and 48.1 trillion won, an increase of 11.5%.
At the end of this month, as client companies complete their inventory adjustments, new demand for memory purchases is expected to increase significantly from the second quarter. Kim noted, “Recently, the supply of DRAM and NAND has fallen short of customer request order volumes by half,” adding that “supply is greatly lagging behind the pace of demand recovery, and rush orders from client companies are on the rise.”
Accordingly, Samsung Electronics is expected to push for price increases of DRAM and NAND starting in April. Samsung Electronics' operating profit for the first quarter was 5.2 trillion won, in line with market consensus. Kim stated, “The first quarter results are expected to mark a low point, with growth in performance continuing until the fourth quarter,” explaining that “the operating profit for semiconductors (DS) is anticipated to show significant improvement trends, with 500 billion won in the first quarter, 2.8 trillion won in the second quarter, 6.3 trillion won in the third quarter, and 8.1 trillion won in the fourth quarter.”
From the second quarter of this year, demand for DRAM and NAND is expected to exceed supply, and the trend of improving supply and demand for general-purpose memory is projected to continue into the second half. This is because the growth rate of DRAM and NAND demand (15%) is expected to outpace the production growth rate (10%) in 2025-2026.
Additionally, Kim noted that “the conclusion of inventory adjustments by client companies has led to a return to normal inventory (6-7 weeks) since the end of March,” and that “in the second half of this year, due to the expansion of the supply possibility of NVIDIA's fifth-generation high-bandwidth memory (HBM) HBM3E 12-layer, improvements in the product mix of DRAM are expected along with supply reductions.”
He added, “The current stock price of Samsung Electronics at historical lower valuations is expected to benefit from the anticipated resumption of short selling and amendments to commercial law in the future.”