[Edaily Reporter Park Sun-Yeop ] Although SamsungElectronics’ stock price has been plagued by volatility and speculation over whether it has peaked following a sharp rally, analysts say there is no need for concern given the company’s improving profits and expanded shareholder returns. Amid ongoing supply-demand imbalances in memory semiconductors driven by increased investment in artificial intelligence (AI), analysts believe that rising prices—particularly for High-Bandwidth Memory (HBM)—could raise expectations for SamsungElectronics’ earnings once again.

On the 25th, Ryu Hyung-geun, an analyst at DaishinSecurities, maintained a “Buy” rating and a target price of 560,000 won for SamsungElectronics (005930). Although SamsungElectronics’ stock price has become more volatile due to a combination of profit-taking following a recent sharp short-term rally and concerns about trading at high levels, DaishinSecurities views the current phase as a period of simultaneous improvement in earnings and shareholder returns.

Analyst Ryu explained, “Although recent stock price volatility has sparked premature concerns about the market reaching a peak, there is no need to be swayed by this,” adding, “The earnings wall is becoming more solid, and we can also expect a strengthening of shareholder return policies.”

First, the firm believes second-quarter earnings may fall short of market expectations. DaishinSecurities estimated SamsungElectronics’ second-quarter operating profit at 82 trillion won, which is below the market consensus of 86.8 trillion won. This is because a provision for performance-based bonuses in the DS division is expected to be reflected in the range of the high 10 trillion won. However, Analyst Ryu assessed this as a “one-time issue.”

The key factor is the subsequent rise in memory prices. The analysis suggests that as major clients continue to expand capital expenditures to secure a foothold in the AI market, while production increases remain limited, the imbalance between semiconductor supply and demand could widen further. In this process, the rate of increase in memory semiconductor prices is expected to become steeper.

In particular, HBM is expected to once again drive earnings improvement in 2027. DaishinSecurities projected that the average selling price (ASP) of HBM in 2027 will rise by 65% year-over-year. Accordingly, it raised its 2027 operating profit forecast for SamsungElectronics from the previous 503 trillion won to 532 trillion won.

The firm also highlighted the potential for enhanced shareholder returns as an investment point. DaishinSecurities noted that SamsungElectronics may resume share buybacks for the purpose of paying employee performance bonuses, and that investors can expect strengthened shareholder return policies, such as special dividends or share buybacks and cancellations. Given that free cash flow (FCF) generated within the year is expected to exceed 300 trillion won before accounting for mergers and acquisitions (M&A), the firm explained that the environment is conducive not only to shareholder returns but also to aggressive M&A aimed at securing future growth engines for the DX division.

The report also noted that there is room for a reevaluation of the non-memory semiconductor and DX sectors, which are currently the subject of significant market concern. Currently, the market is worried that the DX sector will see a deterioration in earnings in the second half of the year due to rising component prices and intensifying competition, while the non-memory semiconductor sector faces prolonged losses due to increased provisions for performance-based bonuses.

While acknowledging that these concerns are reasonable, Analyst Ryu pointed out, “SamsungElectronics’ stock price shines brightest when its value as a comprehensive semiconductor company is highlighted.” Although additional foundry orders are needed, he believes conditions are being established to generate synergies during the upswing, considering factors such as the stabilization of yield rates for cutting-edge processes and the fact that the growth rate of foundry industry production capacity is lagging behind the growth rate of customer demand.

He projected that SamsungElectronics will expand its scope beyond a non-memory business structure centered on mobile application processors (APs) to include HBM base dies, automotive semiconductors, mobile APs, and application-specific integrated circuits (ASICs). While short-term losses are inevitable due to provisions for performance-based bonuses, the analysis suggests there is ample room for revaluation given the inherent value of improved business competitiveness.

Analyst Ryu stated, “In the current undervalued environment, the reflection of this value in the stock price could drive a resilient rise in the share price.”