Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Kyobo Securities | Rating: Buy (Maintained)
- Target Price: 500,000 KRW (~$372.23 USD based on 1343 KRW/USD)
- Core Thesis: Unprecedented quarterly operating profit exceeding 100 trillion KRW driven by the HBM4 ramp-up and a sustained memory upcycle.
- Key Driver: Transition of capacity toward High Bandwidth Memory (HBM) is restricting general-purpose DRAM supply, sustaining high Average Selling Prices (ASPs).
Investment Thesis and Target Price
Kyobo Securities maintains a Buy rating and a Target Price of 500,000 KRW (~$372.23 USD based on 1343 KRW/USD). The analyst emphasizes the sustainability of the memory upcycle and the recovery of HBM competitiveness. A critical valuation driver is the strategic shift in production capacity; while overall DRAM capacity is expanding, the aggressive transition toward HBM is limiting the supply of general-purpose DRAM, which is expected to prolong supply shortages and price strength. HBM capacity share is projected to grow from 27% in 2025 to 40% by 2027.
Earnings Estimates and Financial Preview
For 3Q26, consolidated revenue is projected at 204.7 trillion KRW (~$152.4B USD), representing a 138% increase Year-over-Year (YoY) and a 19% increase Quarter-over-Quarter (QoQ). Operating profit is forecasted at 105.0 trillion KRW (~$78.2B USD), a massive 763% increase YoY and 17% increase QoQ, marking the first time the company has entered the era of 100 trillion KRW in quarterly operating profit with an operating margin of 51.3%.
Divisional Breakdown:
- DS (Device Solutions): Expected operating profit of 104.8 trillion KRW (~$78.0B USD) with an operating margin of 69.3%. Assumptions include DRAM and NAND Flash shipments increasing by +4% and +5% QoQ, respectively, with ASPs rising by +18% and +20% QoQ.
- DX (Device Experience): Expected to remain in deficit due to rising raw material costs (including memory). MX/Networks and VD/DA are estimated to post operating losses of 1.2 trillion KRW (~$893.5M USD) and 0.3 trillion KRW (~$223.4M USD), respectively.
- SDC (Samsung Display): Forecasted operating profit of 1.1 trillion KRW (~$819.1M USD), reflecting depreciation burdens from 8.6-generation IT OLED despite new product effects from major customers.
Long-term Forecasts: Annual operating profit is estimated at 365.2 trillion KRW (~$272.0B USD) for 2026 (YoY +737%), 520.0 trillion KRW (~$387.2B USD) for 2027 (YoY +42%), and 562.8 trillion KRW (~$419.1B USD) for 2028 (YoY +8%).
Key Semiconductor Drivers and Catalysts
- HBM4 Momentum: HBM4 sales are expanding rapidly, with 3Q26 revenue expected to increase more than 3x QoQ. HBM4 is projected to account for over 60% of total HBM revenue in the second half of the year.
- Product Roadmap: Future competitiveness is expected to be sustained through the roadmap leading to HBM4E, HBM5, and zHBM, coupled with improvements in Foundry yields.
- Market Demand: Growth is being driven by the expansion of HBM4 sales and increased demand for high-capacity memory for servers.
- Shareholder Value: Increased Free Cash Flow (FCF) and reduced volatility in the memory cycle due to expanded long-term contracts are expected to lead to strengthened shareholder return policies and a re-rating of corporate value.
🔗 Original Source: View the official filing/article here.