[Click eStock] "Samsung Electronics, Non-memory Price Increase... Profit Level Up"

[Asia Economy Reporter Ji Yeon-jin] KB Securities announced on the 15th that it maintains a buy investment opinion and a target stock price of 105,000 KRW for Samsung Electronics, expecting its profit structure to be upgraded due to price increases in the non-memory and display sectors and the application of new technologies.

Dongwon Kim, a researcher at KB Securities, stated, "Samsung Electronics is evaluated to have secured an annual operating profit capacity of around 50 trillion KRW, and going forward, the semiconductor industry will experience significantly reduced amplitude and cycle length compared to the past due to lower volatility and shorter cycles, which will drive mid- to long-term valuation increases."

Samsung Electronics' sales in the third quarter of this year are expected to increase by 6% year-on-year to 71.9 trillion KRW. Operating profit is anticipated to reach 17.5 trillion KRW, marking the highest performance in three years. Semiconductor operating profit is estimated at 9.5 trillion KRW, IM (smartphone) at 3.5 trillion KRW, DP (display) at 1.4 trillion KRW, and CE (consumer electronics) at 800 billion KRW. Operating profit for the fourth quarter is expected to be 14.6 trillion KRW due to a slowdown in the rise of memory prices and seasonal demand decline.

Researcher Kim explained, "From the second half of the year, Samsung Electronics' non-memory (foundry) sector performance is expected to improve significantly as price, quantity, and cost all improve simultaneously," adding, "① Samsung Electronics implemented its first price increase (+10~15%) since starting the foundry business, ② full operation is being recorded due to increased orders across all foundry production lines, and as of September, the 5nm production yield has risen more than twice as fast compared to the beginning of the year."

Accordingly, the operating profit of the non-memory sector, which was only around 200 billion KRW in the second quarter of this year, is estimated to approach an average of 1 trillion KRW per quarter next year.