KB Securities said on the 19th that the memory chip shortage is likely to persist through 2030, and it assessed that Samsung Electronics has ample room for further share-price gains. It maintained a Buy rating and a target price of 320,000 won. Samsung Electronics' previous day's closing price was 208,500 won.
KB Securities analyzed that the current memory market still has only about a 60% fulfillment rate of customer demand, indicating a supply-demand environment where securing volume takes priority over price.
It also said that given Samsung Electronics' limited memory production capacity, memory chips are effectively sold out through 2027.
Kim Dong-Won, head of research at KB Securities, explained, "This is because, considering the recent pace of demand growth and wafer production capacity, the tight supply-demand environment for memory chips is highly likely to continue at least through 2028."
At the same time, it projected that DRAM and NAND flash prices will rise 148% and 111%, respectively, from a year earlier.
For this year, it forecast Samsung Electronics' operating profit at 220 trillion won, a 405% surge from a year earlier. The DRAM institutional sector is expected to post 163 trillion won in operating profit, about six times higher than a year earlier, helped by increased shipments of server DRAM and sixth-generation high bandwidth memory (HBM4). The NAND institutional sector is estimated to deliver 47 trillion won, 22 times higher than a year earlier, on expanding demand for enterprise solid-state drives (eSSD) and growing adoption of new storage (ICMS) within the Rubin artificial intelligence (AI) platform.
KB Securities projected Samsung Electronics' first-quarter operating profit this year at 40 trillion won, up sixfold from a year earlier, and second-quarter operating profit at 51 trillion won, up elevenfold.
Kim said, "Recently, big tech companies are increasingly asking Samsung Electronics to sign long-term supply agreements (LTAs) of more than three years that guarantee both volume and price," adding, "The expansion of LTAs is expected to simultaneously enhance earnings visibility and profit stability going forward."
It also predicted that, given the limited wafer production capacity of the three memory companies including Samsung Electronics, the memory chip shortage is increasingly likely to be prolonged for four to five years, through 2030.
Kim said, "Samsung Electronics' current share price is at 6.7 times 12-month forward price-earnings ratio (PER) and 2.1 times price-to-book ratio (PBR), or about one-third of peers," adding, "Despite a surge in earnings, Samsung Electronics appears to be in the early stages of a rerating phase, leaving ample room for further gains."