Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: DS Investment & Securities | Rating: Buy | Target Price: 2,640,000 KRW (~$1,977 USD)
- 3Q26 Performance: Revenue of 104.6 trillion KRW (~$78.3B USD) and Operating Profit of 83.3 trillion KRW (~$62.4B USD), both significantly beating consensus.
- Core Thesis: Exceptionally strong 4Q26 DRAM Bit Growth (B/G) guidance (mid-20% range) driven by M15X ramp-up, 1c DRAM yield improvements, and full HBM4 revenue reflection.
- 2027 Outlook: Operating profit estimate raised by 9% to 443.8 trillion KRW (~$332.5B USD) due to robust demand visibility.
Investment Thesis and Target Price
DS Investment & Securities maintains a Buy rating and a Target Price of 2,640,000 KRW (~$1,977 USD). The valuation is based on a Target P/B of 3x. While the company’s earnings are growing rapidly, the analyst noted that the 2027 Book Value Per Share (BPS) estimate remains at previous levels because the effect of capital expansion from profit growth is largely offset by expanded cash dividends and share buyback plans. The current stock price (as of 10/27) is 1,341,000 KRW (~$1,004 USD), representing a potential upside of 96.9%.
Earnings Estimates and Financial Preview
3Q26 Actuals (Preliminary):
- Revenue: 104.6 trillion KRW (~$78.3B USD), +32% QoQ (Exceeded consensus of 76.2 trillion KRW).
- Operating Profit: 83.3 trillion KRW (~$62.4B USD), +38% QoQ (OPM 80%).
- ASP Trends: DRAM ASP increased by 28% QoQ; NAND Flash ASP increased by 27% QoQ.
- Divisional OPM: DRAM 84%, NAND Flash 66%.
4Q26 Forecast:
- Revenue: 128.3 trillion KRW (~$96.1B USD), +23% QoQ.
- Operating Profit: 102.1 trillion KRW (~$76.5B USD), +23% QoQ (OPM 80%).
2027 Full Year Forecast:
- Operating Profit: Revised upward by 9% to 443.8 trillion KRW (~$332.5B USD), representing a 56% YoY increase (OPM 56%).
- Revenue: Estimated at 562.0 trillion KRW (~$420.9B USD).
Key Semiconductor Drivers and Catalysts
1. DRAM and HBM Momentum: The most critical catalyst is the 4Q26 DRAM B/G guidance of mid-20%. This is supported by the early ramp-up of the M15X plant and yield improvements in 1c DRAM. While B/G dipped in 3Q due to generational transitions, HBM4 revenue is expected to be fully reflected in 4Q. In 4Q, HBM4 is projected to crossover HBM3E in both shipment share and revenue.
2. Long-term Demand Visibility: Management stated that DRAM and High Bandwidth Memory (HBM) volumes are virtually “Sold Out” through 2029. Approximately 50% of capacity for 2027-2028 is already secured via Long-Term Agreements (LTAs).
3. AI Infrastructure Diversification: Investment is shifting from a few Big Tech firms to a broader base, including sovereign AI, on-premise demand, and general corporate AI infrastructure, reducing the risk of a sudden investment cliff.
4. NAND Flash Opportunities: The expansion of KV cache size in AI systems is creating new demand for SSDs as they evolve into a context memory layer.
🔗 Original Source: View the official filing/article here.