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Valuation appeal has increased

Maintain Buy and TP of W275,000

Following the start of US strikes on Iran on Feb. 28, shares of Samsung Electronics (SEC) have experienced a panic-driven sell-off, falling 19.9% over just five trading days (as of the Mar. 9 close). While uncertainty remains (given the difficulty of predicting when the conflict will end), we note that leading indicators for the memory market remain solid. Moreover, the stock price level has become more appealing, and the estimated dividend yield has also risen. Accordingly, we maintain our target price at W275,000.

First, memory prices remain firm. Currently, DRAM spot prices are trading at significant premiums to March contract prices―approximately 290% for DDR5 and 130% for DDR4. Although the size of these premiums might suggest that prices could be vulnerable to correction in an unstable external environment, spot prices have seen limited downside (or even continued to move higher) since the conflict began, with the DDR5 price gaining 0.5% and the DDR4 price slipping only 3.1%.

This provides further evidence that memory demand remains solid. Since last year, the buyer mix has shifted toward North American AI data centers, reducing the share of consumer-oriented demand to the low-40% range (vs. around 55% historically). Moreover, even consumer IT device makers may consider raising their safety stock levels, given the supply disruptions experienced during the COVID-19 pandemic and the Russia?Ukraine war.

Second, valuation appeal has increased significantly. The stock has fallen sharply despite unchanged earnings estimates, causing its 12-month forward P/E and P/B to fall to 5.4x and 1.8x, respectively (as of the Mar. 9 close). Even setting aside SEC’s growth potential and profitability, the stock is trading at valuations that are low in both absolute terms and by historical standards, and remains far from levels that would be expected to trigger further selling pressure.

Third, the stock’s recent fall has lifted its estimated dividend yield to around 5% (based on the current price). With 2026 marking the final year of the company’s current three-year shareholder return program, free cash flow exceeding W60tr could be distributed through special shareholder returns. Assuming a 25% payout ratio (the threshold required for separate taxation of dividend income), we estimate 4Q26 DPS at W8,110, implying a dividend yield of 4.7% (6.7% for preferred shares) based on the Mar. 9 close.

Meanwhile, our operating profit estimates for 1Q26 (+86% QoQ to W37.4tr) and 2026 (+419% YoY to W227tr) remain unchanged. We see a high likelihood that the stock will recover as the earnings reporting period approaches. For existing shareholders, we recommend maintaining positions; for investors not yet holding the stock, we believe current levels should be considered a buying opportunity. All in all, we believe that the current weakness offers another entry point for those who missed out on the dramatic rally earlier this year.