Mirae Asset Securities logo

Positive momentum continues

Reflecting continued strength in memory pricing

We maintain our target price for Samsung Electronics (SEC) at W300,000. We slightly raised our earnings estimates to reflect the uptrend in memory prices but left our target price unchanged, as it still implies sufficient upside from the current share price. While 12-month forward P/E remains low in absolute terms, P/B is near the upper end of the historical range. That said, if the elevated ROE level is sustained, we believe the valuation floor could rise.

Concerns have recently emerged over a potential peak in memory prices. However, we expect prices to remain high, supported by: 1) the structural advancement in smartphone specifications; 2) latent demand arising from the divergence in supply/demand dynamics between data center and consumer IT applications; and 3) current structural constraints on capacity expansion. Accordingly, we expect the current high ROE level to be sustained.

Memory contract prices remain firm. As of mid-March, TrendForce’s 4Q26 PC DRAM contract price estimate for DDR5 is holding steady, while its estimate for DDR4 has been revised up by an additional 2.9%. On a per-Gb basis, DRAM price forecasts are trending toward US$2.1, whereas our current 4Q26 ASP/Gb assumption for conventional DRAM stands at only US$1.8, suggesting further upside to our estimates.

For 1Q26, we forecast revenue at W124tr (+32.2% QoQ) and operating profit at W41.3tr (+105.9% QoQ). By division, we forecast operating profit at W3.5tr for DX (OP margin: 6.3%) and W37.2tr for DS (OP margin: 55.3%). For memory, we forecast DRAM and NAND bit growth at +4.3% and +8.0%, respectively, and blended ASP growth at +55.4% and +53%, respectively. Meanwhile, we expect foundry losses to narrow to roughly W1tr.

For 2026, we now look for revenue of W601tr (+80% YoY) and operating profit of W251tr (+476% YoY), up 1.5% and 3.0% from our previous estimates, respectively. Our bit growth projections remain unchanged (+25% for DRAM and +20% for NAND), but we raised our ASP growth forecasts (+3.0%p for DRAM and +9.9%p for NAND), reflecting ongoing memory price strength. We forecast NAND OP margin to improve to 61.6%.

In its corporate value enhancement plan disclosure on Mar. 19, SEC reaffirmed its intention to allocate up to 50% of three-year cumulative free cash flow to special shareholder returns. We forecast 2026 net profit attributable to owners of the parent at W226tr. Assuming a 25% payout ratio (the eligibility threshold for the dividend income separate taxation scheme taking effect this year), we estimate 2026 DPS at W8,610, implying a dividend yield of 4.3% (based on the current price).

Additionally, recent positive developments such as foundry orders from Nvidia, a reported HBM4 supply deal with OpenAI, and reports of long-term supply agreements with big tech companies could serve as valuation catalysts.