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2026-07-31 16:45:47 Following SAMSUNG ELEC (005930.KS)'s 2Q results announcement, JPM held meetings with management after the earnings release. The broker maintained its "Overweight" rating, but lowered the TP from KRW480,000 to KRW400,000 to reflect the current market environment and the narrative surrounding the memory downcycle, while also reducing the target valuation multiple from 8x to 6x. JPM said management provided clear information on long-term agreements (LTA) during the earnings conference call and expressed strong confidence in improving execution capabilities in HBM and foundry operations, while remaining optimistic on the outlook. Management disclosed that 60% to 70% of future memory capacity, including DRAM and NAND, has already been secured through LTAs. The contracts are based on a five-year term with annual extension options and include minimum price protection clauses to ensure sufficient returns and incentivize investment. Management also said LTAs have been completed with five major CSP customers, while contracts with another five major AI customers are under negotiation. More than one-quarter of LTA prepayments had been received as of the end of 2Q. JPM believes Samsung is making smooth progress on HBM4 and HBM4E samples, and expects HBM4 (12Hi solution) sales to grow 3% in 2H this year, accounting for 60% of HBM sales in 2026. The broker also expects Samsung's HBM market share in 2027 to align with its overall DRAM market share. On the foundry business, Samsung recently secured an approximately USD200 billion order from AVGO and continues to win 2nm orders, including AVGO network chips, Samsung's in-house SoCs and Tesla AI chips. JPM expects the quality of the foundry business mix to improve significantly. Management expects eSSD sales contribution to exceed 60% this year, QLC bit shipments in 2H to double from 1H levels, while V10 NAND (300+ layers) entered mass production in August. JPM forecasts Samsung's EPS at KRW50,797 in 2026, KRW72,303 in 2027 and KRW88,298 in 2028, implying an earnings CAGR of more than 30%. The broker believes the risk-reward profile could become highly attractive over a 12-month investment horizon and recommended investors accumulate shares during periods of share price weakness. (ad/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |