[E-Daily Reporter Park Jung-Soo ] On the 31st, LS SECURITIES raised its target price for SamsungElectronics(005930)by 12.5%, from 400,000 won to 450,000 won, noting that concerns regarding mass-production feasibility are easing as yield rates improve despite the expanding share of HBM4. The firm maintained its “Buy” rating. The closing price on the 28th was 257,500 won.
Jeong WOOSUNG, an analyst at LS SECURITIES, explained, “According to industry data, the share of HBM4 in SamsungElectronics’ total HBM shipments rose from approximately 5% in the first quarter of this year to about 35% in the second quarter.” He added, “Even though this is a phase where the share of new products is expanding rapidly, the HBM ‘Mixed’ yield in the second quarter is estimated to have improved by more than 5 percentage points compared to the previous quarter.”
He continued, “Unlike during the initial mass production of HBM3E, it appears that SamsungElectronics has secured relatively high mass-production efficiency with HBM4,” adding, “Consequently, we are raising our estimates for HBM shipment volume and profitability.” The firm believes that if mixed-product yield improves further as the share of HBM4 expands, the pace at which increased HBM revenue leads to an improvement in SamsungElectronics’ overall profitability could accelerate beyond previous expectations.
LS SECURITIES raised its target price to reflect the recovery in HBM competitiveness. While SamsungElectronics’ HBM business had previously acted as a valuation discount factor compared to competitors due to delays in customer certification and low mass-production yield, the firm projected that this discount would gradually narrow as both an increase in the HBM4 shipment share and yield improvements occur simultaneously.
Analyst Jeong stated, “If HBM4 mass production capabilities are further confirmed through actual shipment growth, it will be possible to simultaneously raise HBM profit estimates and re-rate the valuation,” adding, “In particular, once HBM4 begins to increase its profit contribution within SamsungElectronics’ memory business, it could transform the existing profit structure, which has been centered on conventional DRAM.”
However, he took a somewhat conservative view regarding the potential for further increases in memory prices. While the memory supply shortage is expected to persist over the medium to long term, the analyst predicted that the potential for further price increases would be more limited than before, given that the proportion of memory in server budgets has already risen due to previous price hikes. Consequently, once HBM4 regains its competitiveness, rather than expecting sustained multiple expansion driven solely by earnings growth, the analyst proposed a baseline trading range of 1.0 to 1.3 times price-to-book ratio (PBR) based on controlling shareholders’ equity for 2028.
The firm noted that if expectations for shipments of next-generation artificial intelligence (AI) accelerators and new demand strengthen, the upper end of the PBR range could expand to 1.5x. Analyst Jeong stated, “The medium- to long-term direction of the stock price will be more sensitive to the expansion of HBM4 supply and the pace of growth in new AI demand sources than to memory prices themselves.”
LS SECURITIES projected SamsungElectronics’ revenue for this year at 752.1 trillion won and operating profit at 395.1 trillion won. For next year, the firm estimated revenue of 1,100.9 trillion won and operating profit of 664.5 trillion won. In particular, it projected that DRAM operating profit would increase from 309.4 trillion won this year to 524.5 trillion won next year.