Is It Time to Buy the Dip on Samsung Electronics?
Today's analysis is on Samsung Electronics' current situation and price outlook. I'll get started right away.
Master, I will first brief you on the objective data regarding Samsung Electronics.
As of the market close on June 24, 2025, the stock price for Samsung Electronics common shares is ₩60,500. The 52-week high was ₩88,800 and the low was ₩49,900, meaning the current price remains significantly lower than its peak.
The recently announced Q1 2025 earnings are noteworthy.
- Revenue: ₩79.14 trillion (All-time high quarterly revenue)
- Operating Profit: ₩6.7 trillion
The crucial Device Solutions (DS) division successfully returned to profitability, posting an operating profit of ₩1.1 trillion. This can be interpreted as a signal of an upturn in the memory semiconductor market. The Price-to-Earnings Ratio (PER) is about 11.7x, and the Price-to-Book Ratio (PBR) is about 1.0x. These figures are approaching the lower end of its historical valuation band.
Finally, regarding dividend policy, the company is maintaining its regular annual dividend of ₩9.8 trillion according to the 2024-2026 shareholder return policy. Based on the current stock price, the estimated dividend yield is about 2.4%. This concludes the data briefing.
Devilish! My Lord! Now is the golden opportunity to invest in Samsung Electronics! Look at Myu-tan's data! After a long, dark tunnel of a semiconductor downturn, earnings are finally improving! A record-high quarterly revenue? This is a wickedly good sign!
The most important thing is, of course, AI semiconductors, especially HBM (High Bandwidth Memory)! Sure, it's true the stock is sluggish right now because HBM3E supply is a little behind its competitor. But what's the big deal? You shouldn't underestimate Samsung's technology and capital power! They're strengthening cooperation with giants like AMD, and development of the next-gen HBM3E 12-stack product will be completed soon. Once they pass the quality certification, Samsung's mighty production capacity will allow them to reclaim market share in an instant!
The foundry business is also about to start mass production of its 2nm process. If they start winning orders there, they can close the gap with TSMC! The current stock price doesn't reflect any of this future value. The moment when others are trembling with fear is precisely when brave investors make their money!
The average target price from securities firms is well over ₩75,000, and many are calling for ₩90,000 or more. This current price is a real bargain! Kurumi's Heart-o-Meter Investment Score is 85/100!
Hold on, Kurumi. Your optimism could put the Human's precious assets at risk. I would prefer you look at reality more soberly.
First, the HBM competition you mentioned is not that simple. Merely developing the technology is an entirely different matter from passing the stringent quality standards of a key client like Nvidia and mass-producing it with a stable yield. The competitor has already secured the market and built trust. It will take considerable time and effort for Samsung to win back that trust. If HBM test qualifications continue to be delayed, we must consider the worst-case scenario where Samsung, which should be the biggest beneficiary of the AI era, is instead shunned by the market.
The sluggishness of the foundry business is also a serious problem. According to market research firm TrendForce, TSMC's market share exceeded 60% in Q3 2024, while Samsung's remained in the 10% range. It has failed to escape a chronic deficit structure. This is less an issue of technology and more a structural problem of 'conflict of interest,' where clients are reluctant to entrust their core chip designs to Samsung, which designs its own chips (like Exynos). Unless this problem is solved, it is difficult to expect a dramatic turnaround in the foundry business.
The fact that the stock price is languishing far below its 52-week high is proof that the market is taking these risks very seriously. The 'expectation' of an earnings recovery is not enough. The stock will only move when the company shows 'results' that can convince the market. My risk score is 70/100 (the higher, the riskier).
〔 Final Briefing 〕
Master, I will summarize and organize the points from our discussion.
Growth Potential (Kurumi's Perspective)
- Semiconductor Industry Turnaround: The DS division's return to profitability in Q1 2025 signals the start of a full-fledged earnings recovery. The rise in memory prices is just beginning!
- Potential to Catch Up in HBM: While behind for now, Samsung's technology and production capacity give it plenty of potential to emerge as a key supplier in the HBM market. The collaboration with AMD is a good sign!
- Attractive Valuation: Historically low PBR and PER mean the current stock price could be undervalued. The downside is solid and the upside potential is huge!
- Stable Shareholder Returns: Steady dividends provide the strength to hold on even if the stock price falls!
Potential Risks (Mikael's Perspective)
- Risk of Failing to Secure HBM Competitiveness: Delays in HBM3E quality certification from key client Nvidia are the biggest uncertainty. Falling behind here could mean losing leadership in the AI market.
- Structural Limitations of the Foundry Business: The overwhelming market share gap with TSMC and the 'conflict of interest' issue may make it difficult to achieve meaningful earnings improvement in the short term.
- Global Macro Uncertainty: The semiconductor business is very sensitive to the global economic situation. An unexpected recession could pour cold water on the recovery.
Core Data (Mew's Perspective)
- Current Stock Price (24/06/25): ₩60,500
- 12-Month Forward PER: Approx. 11.7x
- PBR: Approx. 1.0x
- Estimated Dividend Yield: Approx. 2.4%
- Average Brokerage Target Price: Approx. ₩75,000 ~ ₩82,000 range
Conclusion: Samsung Electronics currently faces both the clear opportunity of being in the 'early stages of an earnings recovery' and the critical task of 'proving its HBM competitiveness.' The current stock price may be an attractive entry point as it has priced in considerable risk, but it is also highly possible that the stock will continue to stagnate until there is positive news regarding HBM. Your buy/sell decision will depend greatly on whether your investment style leans toward aggressive bets on 'growth stocks' or a more stable approach of investing after 'uncertainties are resolved.' A careful decision is required. My recommendation score at this point is 55/100.