Hana Securities maintained its BUY rating on Samsung Electronics (005930) on the 18th and raised its target price to 480,000 won, as stronger DRAM pricing lifted the earnings outlook despite the inclusion of performance-bonus provisions.
Earnings Outlook: Sharp Recovery Forecast
Hana Securities projects Samsung Electronics' second-quarter 2026 revenue at 179 trillion won (up 140% year-on-year) and operating profit at 92 trillion won (up 1,850% year-on-year). The primary driver is LPDDR (Low Power Double Data Rate) memory prices rising by a substantially wider margin than previously anticipated.
AI Demand Absorbs Smartphone Weakness
Kim Rok-ho, analyst at Hana Securities, noted that demand for LPDDR chips used in AI-dedicated CPUs remains robust, led by Nvidia. Although Chinese smartphone manufacturers have trimmed their orders, AI-related demand has more than compensated for the shortfall.
Bonus Provisions Already Factored In
From this forecast cycle onwards, Hana Securities has incorporated performance-bonus provisions equivalent to approximately 10% of the DS (Device Solutions, Samsung's semiconductor) division's operating profit for the second through fourth quarters of 2026. Even so, the full-year 2026 operating profit estimate stands at 391.6 trillion won.
2027 Outlook: HBM4 to Lift Blended Pricing
Looking to 2027, a rising share of HBM4 (High Bandwidth Memory 4) in the product mix is expected to push the blended average selling price higher. Hana Securities notes that standard DRAM prices have risen roughly four times relative to their level at the time of the 2026 HBM price negotiations, suggesting that the 2027 HBM contract discussions should yield meaningfully higher pricing than before.
Shareholder Returns
On capital returns, free cash flow (FCF) for 2026 is estimated at approximately 308.8 trillion won. Should Samsung allocate 50% of FCF to shareholder returns, the implied annual dividend would be 14,850 won per share, equivalent to a dividend yield of 4.3% at the current share price.