Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Eugene Investment & Securities
- Investment Rating: Strong Buy (Maintained)
- Target Price: 3,700,000 KRW (~$2,764 USD based on 1339 KRW/USD)
- Core Thesis: Despite currency headwinds, robust memory price increases and HBM4 expansion will drive record operating profits through 2027, with the market likely underestimating the duration of the supply shortage.
Investment Thesis and Target Price
Eugene Investment & Securities maintains a Strong Buy rating and a Target Price of 3,700,000 KRW (~$2,764 USD). The analyst argues that while the market anticipates a sharp slowdown in price growth from 2H26, actual industry conditions remain stronger. The valuation is supported by an expected expansion in operating profit margins from 76% in 2026 to 80% in 2027, while maintaining CapEx intensity in the 10% range. The stock is expected to rise gradually as the gap between market skepticism (concerns over 2028 supply increases and AI demand destruction) and actual performance is closed through quarterly results, 2027 HBM price negotiations, and expanded shareholder returns based on free cash flow.
Earnings Estimates and Financial Preview
3Q26 Forecast: Operating profit is projected at 75.7 trillion KRW (~$56.5B USD), a 25% QoQ increase. Although estimates were revised downward due to a lowered KRW/USD exchange rate assumption (1,400 KRW vs. 1,440 KRW), strong memory pricing is expected to drive the operating profit margin to 77.4% (+1.1%p QoQ).
Divisional Breakdown (3Q26E):
- DRAM: Bit Growth (B/G) +12% QoQ, Blended ASP +20% QoQ. General-purpose DRAM ASP is expected to rise +22% QoQ, led by server DRAM contract price hikes.
- NAND Flash: B/G limited to +3% QoQ due to capacity constraints from transition investments, but ASP is expected to rise +23% QoQ driven by eSSD, resulting in an operating margin of 72.8%.
- High Bandwidth Memory (HBM): B/G +23% QoQ and ASP +11% QoQ, supported by an increased production mix of HBM4.
Long-term Outlook:
- 4Q26 & 1Q27 Operating Profit: Estimated at 89.5 trillion KRW (~$66.8B USD, +18% QoQ) and 102.0 trillion KRW (~$76.2B USD, +14% QoQ) respectively.
- Annual Operating Profit: 2026E: 263.4 trillion KRW (~$196.7B USD, +455% YoY) | 2027E: 454.1 trillion KRW (~$339.2B USD, +72% YoY).
Key Semiconductor Drivers and Catalysts
Price Momentum: The analyst expects 4Q26 and 1Q27 ASPs for general-purpose DRAM and NAND to exceed market expectations (+9% and +10% QoQ for 4Q26; +10% and +3% QoQ for 1Q27). 1Q27 is identified as a critical period where smartphone product price hikes and HBM annual contract renewals coincide.
Supply-Demand Dynamics: Supply shortages are expected to persist into 2027 due to the slowing rate of bit growth following the transition to 1cnm and V9 processes, combined with the timing of new fab operations.
HBM Strategy: 2027 HBM price negotiations are viewed as highly favorable for the supplier. With general-purpose DRAM margins exceeding 80%, the opportunity cost of wafers used for HBM is being reflected in pricing. The 2027 HBM Blended ASP is estimated at $3.31/Gb (+113% YoY).
🔗 Original Source: View the official filing/article here.