KB Securities projected that Samsung Electronics' next shareholder return program could range from 100 trillion won ($70.4 billion) to as much as 200 trillion won annually — more than 10 times the company's current annual return level — and said the large-scale program could serve as a catalyst for a revaluation of the stock.
According to KB Securities on Monday, the new shareholder return policy Samsung Electronics is expected to announce soon could be set at between 100 trillion won and 200 trillion won per year, far exceeding the existing annual return of 9.8 trillion won.
Kim Dong-won, head of research at KB Securities, said that even if the minimum figure of 100 trillion won were adopted, the dividend yield based on the current share price could exceed 7 percent, adding that a large-scale return program would be a key driver of corporate revaluation.
KB Securities maintained a "buy" rating on Samsung Electronics with a target price of 600,000 won per share, saying the stock has ample room to rise from current levels.
The earnings outlook is also positive. KB Securities forecast that Samsung Electronics will set consecutive all-time earnings records for four straight quarters from the fourth quarter of last year through the third quarter of this year. It estimated third-quarter operating profit at 112 trillion won, up 817 percent from the same period last year, with an operating margin of 55 percent.
Profitability in the core memory chip business is also expected to improve. KB Securities projected that the DRAM operating margin would rise from 78 percent in the second quarter to 83 percent in the third quarter, while the NAND margin would climb from 68 percent to 71 percent over the same period. The foundry business is also expected to turn profitable for the first time since 2022 — excluding bonus provisions — as mass production of 4-nanometer LPUs (language processing units) gets fully under way in the third quarter.
On the broader memory chip market, KB Securities said a supply shortage is likely to persist for the foreseeable future. Global hyperscalers are currently meeting only about 60 percent of their memory demand, and since building new production lines takes more than three years, the supply shortfall could last at least three years, the brokerage said.
Kim said major hyperscalers have recently been requesting five-year long-term supply agreements instead of three-year contracts, with a one-year rollover option attached to the base five-year deal.
KB Securities also forecast that Samsung Electronics will strengthen its position in the high-bandwidth memory market. It projected that Samsung's HBM average selling price in 2027 will more than double from the prior year, and that the company will capture a 44 percent share of the HBM4 market to rank first globally.
The brokerage also noted that Samsung Electronics, the world's top DRAM maker, is currently trading at a market capitalization about 4 percent below that of Micron, which ranks third in the global DRAM market, and said the company's valuation remains depressed even after accounting for the dollar premium.
KB Securities estimated Samsung Electronics' full-year sales at 712.2 trillion won and operating profit at 381.78 trillion won for this year, and projected sales of 938.68 trillion won and operating profit of 575.41 trillion won for next year. However, it cautioned that brokerage forecasts are subject to change depending on market conditions and industry trends, and that the actual shareholder return program and earnings figures will need to be confirmed through the company's own announcements.
rainbow@heraldcorp.com
