Why are Samsung Electronics and Hynix's stock prices rising less than U.S. counterparts?

The average target price of nine securities firms updated since October 1st was approximately $1,572. DA Davidson views this memory cycle as a growth cycle lasting more than three years, applying a 19x multiple to raise Micron's target stock price from $2,100 to $3,000. The average target price of nine securities firms updated since October 1st is approximately $1,572, and some assess that it will be difficult to gain market consensus for applying a 19x multiple.

This assessment is based on the view that the current memory cycle is a growth cycle that will last for more than three years, reflecting a positive outlook for the semiconductor industry.

However, the average target price of nine securities firms updated since October 1st is around $1,572, indicating that it will be difficult to gain full market consensus for such a high target price of $3,000.

Micron's current price-to-earnings ratio (PER) for next year is around 6x, compared to about 7x for other memory companies like SanDisk. The $3,000 target price is attributed more to an expansion effect, applying a 19x multiple, which is about 90% higher than the market average multiple of 10x, rather than realistic profit improvement.

Micron's current PER for next year is around 6x, and considering that the PER of other memory companies like SanDisk is also around 7x, 19x is a very high figure.

Thus, the $3,000 target price is analyzed as largely driven by a high multiple expansion rather than realistic profit improvement.

Existing holders are not yet at the selling stage, but analysis suggests a sharp rise within six months is unlikely.

Micron's stock, which had fallen for three consecutive days, showed a short-term rebound today, recovering to about 80% of its previous level.

Around July 31st, when U.S. big tech companies announced their earnings, the U.S. stock market showed strength.

At that time, the Korean stock market surged significantly on July 31st alone, but since then, from August to early October, the KOSPI's return has remained at approximately 4%.

Despite increased CAPEX investment by U.S. big tech firms, Korean semiconductor stocks, including Samsung Electronics and SK Hynix, have shown relatively weak performance compared to the U.S. market.

U.S. Micron showed strong performance, rising by mid-20% in the last two months, and CPU and memory-related stocks in the U.S. generally maintained a solid trend.

SK Hynix ADR (American Depositary Receipt) and Micron were close three days ago, but currently, a discrepancy of about 10% has occurred.

Korean semiconductor stocks are trading at an average discount rate of approximately 35%, which is still considered undervalued compared to the U.S. market.

Although recent expectations have been somewhat lowered due to exchange rate effects, the third-quarter performance figures themselves are not the key factor determining the stock's direction.

The increase rate of semiconductor prices in the fourth quarter is expected to slow down compared to the third quarter, leading to low market expectations for the fourth quarter as well.

Next year's HBM prices are set to be officially applied starting January, following this year's negotiations.

An increase in HBM prices is essential to boost the lower operating profit margin compared to regular DRAM, with some securities firms expecting HBM prices to double next year.

According to these forecasts, Samsung Electronics' total operating profit next year is also predicted to exceed 600 trillion won.

However, exchange rate volatility ranging from 1,360 to 1,480 won could affect profits by 6-10%, which remains a variable.

There are significant differences in the profit forecasts for semiconductor companies, with some analysts raising projections to 630 trillion won compared to the previous 550 trillion won.

This gap, extending to the late 500 trillion won range, depends on whether the HBM price increase rate is viewed as 'double'.

Concerns are also raised that if the price increase rate only reaches about 30%, market disappointment could be significant.

If Samsung Electronics maintains its existing dividend payout ratio of 25% based on increased profits, it could be a factor securing stock price downside rigidity. This acts as a key factor in ensuring stock price downside rigidity. This high dividend policy serves as a key factor in securing stock price downside rigidity.

This acts as a factor to secure the downside rigidity of the stock price, which can be a positive signal for investors.

The current valuation gap between Micron and Hynix ADRs is about 10%. Whether this gap widens to 25% will be an indicator to judge the intensity of the current supply-demand overhang issue and concerns related to Solidigm.

The valuation gap between Micron and Hynix ADRs is currently around 10%, and whether this gap widens to 25% can serve as an indicator to assess the intensity of market concerns.

The dual meaning of 'Unlock Value' in corporate valuation, combined with the complex business structures of Samsung Electronics and SK Hynix, causes errors in valuation.

There is a problem where the accurate disclosure of operating profits for detailed business units like foundry or home appliances is insufficient, leading to the corporate value not being properly reflected and acting as a discount factor.

Because data center SSDs can be subjected to a different price-to-earnings ratio (PER) than general memory semiconductors, a spin-off listing could be an opportunity for new value creation rather than mere value dilution.

This leads to the analysis that if Solidigm's value is properly assessed, it could positively impact the value of SK Hynix's main shares.

Applying a 60% operating profit margin and a 50% net profit margin, Solidigm's estimated net profit is $12.5 billion. The IPO price of $150 billion discussed in the market is considered conservative and reasonable given this profit structure.

Assuming a 60% operating profit margin and a 50% net profit margin, net profit would reach $12.5 billion, and the IPO price of $150 billion discussed in the market is considered conservative or reasonable.

Some raise concerns that SK Hynix's sale of Solidigm at the peak of the semiconductor cycle could be interpreted as a 'hit and run' to pocket profits.

However, despite concerns about dilution of shares upon new stock issuance, if the corporate value is properly recognized, it will be a positive factor for the overall corporate value.

If SK Hynix ADR falls excessively compared to Micron, it could be concluded that the market is not accepting this positive perspective.

To justify next year's performance, the market expects 500-600 trillion won, but some opinions present as low as 300 trillion won, showing a large discrepancy.

Pessimistic forecasts from analysts, considering the possibility of semiconductor price declines in 2028, are already 80-90% reflected in the current stock price.

As long as this uncertainty regarding performance continues, volatility due to supply and demand is inevitable, according to analysis.

The burden of discount rates due to rising interest rates acts as a factor narrowing the range of investment choices.

The U.S. stock market showed strength, consistently holding AI-related stocks such as Nvidia, Google, and Microsoft, and U.S. memory company Micron became a priority investment target based on its valuation attractiveness.

Samsung Electronics and SK Hynix continue to be marginalized due to insufficient demand, despite having higher discount rates compared to the U.S. market.

To restore market confidence and rebound stock prices, annual performance in the range of 100-130 trillion won must be consistently demonstrated.

Analysis suggests that it will take considerable time for investors to be convinced of the sustainability of the semiconductor cycle.

The current sluggish stock performance is seen as a complex result of liquidity constraints and market distrust regarding performance.