[Edaily Reporter Kim Kyung-eun ] On the 10th, KB Securities maintained its target price of 600,000 won and “Buy” investment rating for SamsungElectronics(005930), stating that a future large-scale shareholder return policy is expected to serve as a catalyst for a stock price revaluation.

Kim Dong-won, Head of Research at KB Securities, stated in a report released that day, “We view this as a period to actively increase holdings.”

Kim projected, “The annual shareholder return is estimated to range from a minimum of 100 trillion won to a maximum of 200 trillion won under the shareholder return policy expected to be announced soon,” adding, “This will be more than 10 times larger than the current level (9.8 trillion won).” He further predicted, “If shareholder returns of at least 100 trillion won are implemented, the dividend yield based on the current stock price is expected to exceed 7%.”

Earnings are also projected to continue setting new all-time highs. SamsungSecurities estimated that SamsungElectronics’ third-quarter operating profit would reach 112 trillion won—an 817% increase year-over-year—with an operating margin of 55%. This forecast indicates that the company will set a new record for the fourth consecutive quarter since posting an operating profit of 20 trillion won in the fourth quarter of last year.

The firm believes that the high profitability of the memory business will drive these results. It projected that the third-quarter DRAM operating margin will rise by 5 percentage points to 83% from 78% in the previous quarter, while the NAND operating margin is expected to increase from 68% to 71% over the same period.

The foundry business is also expected to see a full-fledged recovery. With mass production of 4-nanometer (nm) LPU set to begin in earnest in the third quarter, the division is projected to return to profitability for the first time in four years since 2022, excluding provisions for performance-based bonuses.

The fact that the memory supply shortage is expected to persist for at least three years was also cited as a positive factor. This is because the current fulfillment rate for memory demand from Big Tech customers is only around 60%, while it takes more than three years to complete a new memory fab.

“Recently, hyperscalers have been demanding long-term supply agreements (LTAs) spanning five years, rather than the standard three-year contracts,” explained Division Head Kim. “They are also requesting a ‘rollover’ system, where the initial five-year contract is extended by one year at a time.”

Enhanced competitiveness in High Bandwidth Memory (HBM) was also cited as a driver for the stock price rise. SamsungSecurities projected that SamsungElectronics’ average selling price (ASP) for HBM in 2027 will more than double year-over-year, and that the company will secure the top global position with a 44% market share in HBM4.

They also analyzed that the current valuation is undervalued. This is because SamsungElectronics, the global leader in the DRAM market, is trading at a 4% discount to Micron, the third-largest DRAM manufacturer.

“Even when factoring in the U.S. dollar premium, this is an abnormal situation,” said Division Head Kim. “Given that the new shareholder return policy is expected to be at least 10 times larger than the previous one, we view this as a ‘conviction buy’ opportunity.”