NH Investment & Securities on the 1st said that as memory market conditions improve, Samsung Electronics' results will also be strong this year. It maintained its Buy recommendation and raised its target price to 260,000 won from 250,000 won. Samsung Electronics closed the previous session at 167,200 won.
Ryu Young-ho, an analyst at NH Investment & Securities, said, "The magnitude of memory price hikes continues to exceed the market's and our expectations," and noted, "Thanks to the foundry (semiconductor contract manufacturing) price increase effect, the System LSI and foundry divisions are also expected to deliver firmer results than expected."
Samsung Electronics' operating profit for this year is projected at 216 trillion 3000 billion won. That is up 396.1% from a year earlier.
It also gave a positive assessment of Samsung Electronics' recently released decision to cancel treasury shares. Samsung Electronics disclosed that it decided to cancel 73,359,314 common shares and 13,603,461 preferred shares on the 2nd of next month. The expected cancellation amount is about 14.5806 trillion won.
Ryu said, "We expect the cash accumulated through this cycle to work in a positive direction for the upcoming new three-year shareholder return policy decision."
Recently, Samsung Electronics has been pushing to shift supply contracts, which had focused on quarterly terms, to long-term supply agreements (LTA) of three to five years.
Regarding this, Ryu said, "Although market opinions are divided on recent long-term contracts, it is reasonable to interpret them as a shift toward an improved structure that enables a more stable business rather than a cycle with high volatility as in the past."
Meanwhile, there was concern that the rise in memory prices could lead to increased cost burdens for other divisions. However, it was analyzed that because this is the point of transition to Agentic AI (autonomous artificial intelligence), data center demand could increase further.
For Samsung Electronics' first-quarter results this year, it projected revenue of 114 trillion 8000 billion won and operating profit of 4 trillion 2000 billion won, above market expectations. Revenue is up 45% from a year earlier, and operating profit is up 500.9%. However, it added that excluding the DS division, results are expected to be sluggish due to seasonality and rising expense.