Brokerages rush to revise up Samsung Electronics' target price

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Local brokerages are rushing to revise up the target price of Samsung Electronics, buoyed by its strong second-quarter performance amid increases in dynamic random-access memory (DRAM) prices, market watchers said Monday.

According to the country’s bourse operator, Korea Exchange, Samsung Electronics closed at 87,400 won on Monday, up 0.34 percent from the previous session. It reached a midday high of 88,600 won, the highest level in 52 months. It ended at 87,800 won, Tuesday, up 0.46 percent from the previous day.

The recent rise is impacting millions of shareholders of Samsung Electronics in the country, as the IT giant symbolizing Korea has been the preferred choice of investors for many years.

As of the end of 2020, 2.14 million investors held shares in the firm. This figure surged to 5.05 million by the end of 2021, before reaching 5.8 million. It then declined to 4.66 million as of the end of 2023.

Parents betting on Samsung for the long term often buy Samsung shares for their children. Shareholders aged 20 and younger collectively held 391,869 shares of the firm, accounting for 8.38 percent of the total.

Whether the optimism will continue largely depends on the performance of the High Bandwidth Memory (HBM) business. This segment remains a weak spot for the Samsung Group affiliate, with its operating profit lagging behind its global peer, SK hynix.

Market watchers say that up to 6.5 trillion won ($4.6 billion) of the 10.4 trillion won in the Samsung affiliate’s operating profit in the April-June period came from the Device Solutions (DS) division responsible for the semiconductor business.

Eugene Investment & Securities, NH Investment & Securities, Hana Securities, and Kiwoom Securities have all raised their target price range to between 110,000 won and 120,000 won. Previously, the target price was in the mid-100,000 won range.

KB Securities researcher Kim Dong-won projected Samsung Electronics' annual operating profit to reach 44 trillion won this year and 60 trillion won the following year.

Samsung Electronics’ second-quarter operating profit was driven by DDR5 and LPDDR5X price increases, he said.

DDR5 stands for double data rate 5 synchronous dynamic random-access memory, a type of synchronous DRAM. LPDDR5X, on the other hand, is a type of mobile DRAM used in smartphones and other mobile devices. It provides enhancements in speed, power efficiency at higher performance levels, and reduced latency compared to its predecessors.

“DRAM sales are expected to improve throughout the year,” he said.

Korea Investment & Securities researcher Chae Min-suk said the DS division accounted for 60 percent of the Samsung affiliate’s operating profit, bolstered further by the recovery in foundry facilities operations.

“Both DRAM and NAND flash memory drove second-quarter growth, offsetting losses from the previous quarter.”

Meanwhile, Samsung executives have been buying shares of the company, indicating confidence in corporate performance. Data from the Financial Supervisory Service as of June 26 showed that 24 executives purchased a combined 1 billion won worth of Samsung Electronics stocks over the past month.