"There’s Good Reason for Samsung’s 600,000 Won Target Price... Stock Surges on Expectations of At Least Tenfold Increase in Shareholder Returns"

KB Securities: "Samsung Could Return Up to 200 Trillion Won to Shareholders"

"Dividend Yield Could Exceed 7% at Current Prices"

Investor sentiment surrounding Samsung Electronics is heating up once again. This surge comes amid expectations that the new shareholder return policy may be significantly expanded beyond previous levels, coupled with optimism that substantial earnings improvement will be driven by the booming artificial intelligence (AI) memory market.

Seocho-dong.

On August 10, KB Securities projected that Samsung Electronics’ annual shareholder return could reach a minimum of 100 trillion won and up to 200 trillion won, maintaining its target price at 600,000 won and a 'Buy' investment rating.

What the securities industry is focusing on is not simply the dividend scale. Multiple factors are simultaneously being highlighted as grounds to reassess Samsung Electronics’ corporate value: rising memory prices, persistent supply shortages, a recovery in high bandwidth memory (HBM) competitiveness, and the possibility of a turnaround into profitability for the foundry business.

A Definitive Buying Opportunity... Shareholder Returns to Rise More Than Tenfold

KB Securities estimates that the annual scope of the new shareholder return policy, which Samsung Electronics is expected to announce soon, will be between a minimum of 100 trillion won and a maximum of 200 trillion won. Compared to the current annual shareholder return of 9.8 trillion won, this would represent an increase of at least tenfold.

Kim Dongwon, Head of Research at KB Securities, diagnosed that if such massive shareholder returns materialize, it could become a key driver for a re-rating of the stock. He specifically forecast that even if the shareholder return amount is set at a minimum of 100 trillion won, the dividend yield could exceed 7% based on current stock prices.

Based on these factors, KB Securities maintained its 'Buy' rating and 600,000 won target price for Samsung Electronics. Kim judged the current price level as a "definitive buying opportunity" for the stock, indicating it is a favorable time to actively increase portfolio weightings.

Record-Breaking Earnings Expected... Memory Leading the Way Again

The backdrop to expanding shareholder returns lies in dramatically improved earnings and cash generation. Samsung Electronics reported a provisional operating profit of 89.4 trillion won in the second quarter this year. Excluding approximately 17 trillion won set aside for incentive payouts, the actual figure is estimated at over 106 trillion won. A surge in memory demand driven by the expansion of the AI industry has powered this sharp short-term earnings increase.

Samsung Electronics Seocho Building, Seocho-dong, Seocho-gu, Seoul.

KB Securities anticipates that Samsung Electronics will post record-high quarterly operating profits for the fourth straight quarter from Q4 last year through Q3 this year. For the third quarter of 2026, operating profit is projected at 112 trillion won, up an astounding 817% from a year earlier, with an expected operating margin of 55%.

Notably, it is expected that profitability in the memory business will see remarkable improvement. The operating margin of DRAM is forecast to rise by 5 percentage points to 83% in Q3, up from 78% in Q2, while NAND operating margin is anticipated to climb from 68% to 71% over the same period.

The outlook for a turnaround in the foundry business is also drawing attention. KB Securities predicts that with the full-scale mass production of 4nm LPU (language processing unit) beginning in the third quarter and after excluding incentive provisions, the business could return to profitability for the first time in four years, since 2022.

KB Securities estimates Samsung Electronics’ revenue at 712.204 trillion won and operating profit at 381.776 trillion won for this year. For next year, revenue is projected to reach 938.685 trillion won with operating profit accelerating further to 575.407 trillion won.

Prolonged Memory Supply Shortage... Simultaneous Gains in Price and Profitability

The outlook for the memory market remains bright. KB Securities believes that the current global memory supply shortage could continue for at least three years, potentially persisting until 2028. This view is supported by the fact that, as of August this year, major big tech customers’ memory demand is being met at only about 60%, while it typically takes more than three years to construct and bring new memory fabs into actual production.

If supply expansion fails to keep pace with demand growth, a favorable environment for memory prices and profitability could be sustained over the long term. The key point is that demand from hyperscalers operating AI data centers is structurally expanding.

Director Kim Dongwon explained that hyperscalers have recently been increasingly demanding long-term supply agreements (LTAs) of five years, rather than the traditional three-year contracts. They are even requesting contracts that combine a five-year base term with a one-year rollover option. This suggests that the expansion of AI infrastructure is driving not just a temporary spike in demand, but rather a long-term competition to secure memory supplies.

On the 10th, employees are monitoring the stock market and exchange rates in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul.

In the HBM market as well, a rebound for Samsung Electronics appears likely. KB Securities forecasts that Samsung’s average selling price (ASP) for HBM in 2027 will more than double year-on-year, with its HBM4 market share rising to 44%, securing the top position worldwide.

There are rising expectations that Samsung Electronics can further enhance its presence in next-generation memory technology. In fact, Samsung Electronics recently unveiled prototypes of its next-generation 3D memory architectures 'zHBM' and 'zNAND-O' at the 'FMS 2026' held at the Santa Clara Convention Center in California, presenting a bold vision for next-generation memory technologies in the era of AI.

"Undervalued Given Its Performance"

The current valuation level of Samsung Electronics is another focal point for the securities industry. KB Securities analyzed that the market capitalization of Samsung Electronics, the world’s No. 1 in the DRAM market, is trading at a roughly 4% discount compared to Micron Technology, which ranks third in the DRAM market. Taking into account the US dollar premium, it suggests that Samsung Electronics’ current corporate value is relatively low.

Ultimately, if shareholder return expansion, earnings improvement, a favorable memory market, and a recovery in HBM competitiveness are all realized simultaneously, the discount factors that have persisted could be reduced, paving the way for a re-rating of the company’s value.

This content was produced with the assistance of AI translation services.