[Click eStock] "Samsung Electronics Has the Greatest Upside Potential Among DRAM Manufacturers"

On January 15, KB Securities maintained its "Buy" investment rating and target price of 200,000 won for Samsung Electronics, stating, "We can expect a resilient improvement in earnings due to rising memory prices." The previous day's closing price was 140,300 won.

On this day, Kim Dongwon, Head of Research at KB Securities, said, "As of the first quarter of this year, the DRAM supply fulfillment rate for major customers remains at 60% (50% for server DRAM), meaning that supply shortages have actually intensified compared to the fourth quarter of last year."

Demand for high bandwidth memory (HBM), server DRAM, and enterprise solid-state drives (eSSD) is also surging simultaneously. This is because server data processing volumes have increased significantly, driven by the expansion of artificial intelligence (AI) inference services and the proliferation of AI application services among cloud providers.

Kim further explained, "In particular, physical AI technologies such as humanoid robots and autonomous driving are characterized by on-device AI that performs inference within the device, leading to a sharp increase in the proportion of high-value memory, such as high bandwidth and low-power memory. Going forward, memory semiconductors are expected to rapidly emerge as strategic assets for big tech companies preparing for the commercialization of physical AI."

Samsung Electronics' operating profit for the first quarter of this year is expected to reach 27 trillion won, a fourfold increase (305%) year-on-year, while second-quarter operating profit is forecast at 34 trillion won, a sevenfold increase (617%), suggesting an earnings surprise in the first half of the year. This year, DRAM prices are expected to rise by 87% year-on-year, and NAND prices by 57%, so memory semiconductor operating profit is estimated at 133 trillion won, up 324% from last year. Total operating profit is projected to more than triple (233%) to 145 trillion won.

This year, Samsung Electronics' HBM shipments are expected to triple year-on-year to 11.2 billion Gb, with HBM market share nearly doubling to 35%. Kim noted, "Samsung Electronics' HBM4, which is expected to be shipped in earnest to Nvidia starting in March, will deliver the industry's highest performance. Samsung is expected to gain a competitive edge in supplying Nvidia's high-performance Rubin products, so HBM4 market share is anticipated to enter the leading ranks."

He also added, "Currently, the stock is trading at a price-to-earnings ratio (PER) of 7.7 times and a price-to-book ratio (PBR) of 1.8 times based on this year's estimates, making it the most undervalued among global DRAM manufacturers. Therefore, the stock's upside potential is expected to be the highest going forward."