[Click e-Stock] "Time to Focus on Improvements Expected for Samsung Electronics in the Second Half"

Target Price Raised from 73,000 Won to 79,000 Won

On June 13, Hanwha Investment & Securities raised its target price for Samsung Electronics from 73,000 won to 79,000 won, stating that while the company's second-quarter performance this year may hit bottom, it is time to focus on improvements expected in the second half of the year. The investment opinion remains 'Buy'.

Samsung Electronics' second-quarter sales are expected to reach 75.7 trillion won (down 4% quarter-on-quarter), with operating profit at 6.1 trillion won (down 8% quarter-on-quarter), representing a slight decrease from the previous quarter. Kim Gwangjin, a researcher at Hanwha Investment & Securities, said, "The DS division's profit is expected to improve quarter-on-quarter due to the overall increase in conventional DRAM prices." However, he added, "The improvement in profit is likely to be somewhat limited due to several negative factors, including the adverse effects of a weaker exchange rate, a delay in entering the HBM3E 12-layer market resulting in only a limited increase in shipment volume, and a slower-than-expected reduction in foundry losses."

Nevertheless, the intensified supply constraints in conventional DRAM and performance in HBM3E 12-layer could be factors that turn the situation around in the second half of the year. Kim noted, "Currently, the conventional DRAM market is experiencing heightened supply constraints for both D5 and D4, due to production capacity limits and end-of-life (D4) issues." He continued, "As a result, there is a possibility that strong prices will continue in the second half, and Samsung Electronics, which has relatively more flexibility in conventional DRAM production compared to competitors, could benefit from this situation."

He also said, "It is regrettable that Samsung Electronics missed many market opportunities this year due to delays in entering the NVIDIA supply chain compared to the original target, but the market's concern that entry within the year may be uncertain seems somewhat excessive." He pointed out, "In particular, if the company adopts a more aggressive pricing policy than its competitors, this could become an effective sales strategy in line with NVIDIA's need to diversify its HBM vendors." The analysis suggests that Samsung Electronics could enter NVIDIA's supply chain in the second half of the year and secure a meaningful market share next year.