[Click eStock] "Samsung Electronics 10 Trillion Won Share Buyback, Opportunity for Short-Term Rebound"

"Target Price 80,000 Won, Buy Rating Maintained"

On the 18th, KB Securities maintained a target price of 80,000 KRW and a buy rating for Samsung Electronics, stating that the 10 trillion KRW share buyback would serve as a catalyst for a short-term rebound.

On the 15th, Samsung Electronics' board of directors decided on a 10 trillion KRW share buyback. This decision came after the stock price closed at 57,000 KRW on the 8th and the price-to-book ratio (PBR) fell below 1 for five consecutive days. This is the third share buyback after those in 2015 (11.3 trillion KRW) and 2017 (9.3 trillion KRW).

Since 2010, Samsung Electronics' stock price has fallen below a PBR of 1 a total of five times, including in 2024. Considering past stock price trends following share buyback decisions, Samsung Electronics' stock price clearly acted as a catalyst for a short-term upward trend and rebound.

However, thereafter, the stock price was directly influenced by whether earnings improved due to a recovery in the semiconductor market, which determined the magnitude of the mid- to long-term price increase.

The memory semiconductor market in 2025 is expected to show a clear demand polarization, with an increase in DDR4 inventory centered on mobile and PC until the first half of the year and a supply easing of DDR5, while a supply shortage of AI-focused HBM memory is expected to continue.

Therefore, the memory market in the first half of next year will likely determine the supply-demand and price direction in the second half depending on the speed of reduction in general-purpose memory inventory.

Accordingly, Samsung Electronics' memory strategy in 2025 is expected to focus on profitability centered on AI and high-capacity server memory rather than market share growth through supply expansion. Capital expenditures in 2025 will concentrate on conversion investments and back-end processes rather than new expansions, and the supply of memory semiconductors next year is expected to remain limited.

Performance in 2025 is projected to reach sales of 321.3 trillion KRW (+6%) and operating profit of 43.2 trillion KRW (+21%), similar to the 2022 operating profit of 43 trillion KRW.

This is because the global HBM market's shipment share of HBM3E is expected to expand from 46% in 2024 to 85% in 2025, with next year's HBM sales accounting for one-quarter of DRAM sales (64.8 trillion KRW), partially offsetting the decline in general-purpose DRAM prices.

Dongwon Kim, a researcher at KB Securities, said, "This 10 trillion KRW share buyback decision is expected to act as a catalyst for a short-term rebound in Samsung Electronics' stock price. However, the mid- to long-term stock price momentum will likely require early market entry led by securing dominance in HBM4 next year and a clear reduction in general-purpose memory inventory such as DDR4 and DDR5."