Samsung Electronics Share Price Slump Despite Shareholder Returns: Why?

SK hynix recently executed a 40 trillion won share buyback and cancellation. This large-scale shareholder return policy is evaluated as having been far more effective in boosting stock prices than Samsung Electronics'. The market views SK hynix's proactive moves as having a positive impact on its stock price.

SK hynix's recent share buybacks show a mechanical buying pattern concentrated at specific times. The pattern of stock prices falling again after the buybacks conclude is repeating. Critics suggest that while this method may allow for continuous stair-step increases, it is insufficient for market dominance.

Caution in the market is rising ahead of NVIDIA's earnings announcement. With AI chip prices already soaring, NVIDIA has implemented additional price increases, and noise related to memory supply shortages is fueling market doubts. Given the current supply and demand situation, analysis suggests that substitution with competitor products is difficult.

Samsung Electronics is focusing on securing the yield of primal-nano chips rather than expanding supply. As a result, production volume itself is not increasing significantly. This year's capacity expansion is also expected to be limited to about 5% relative to the investment.

It is expected to be difficult to anticipate the rapid index growth seen in the first half of the year. Investors should focus more on the potential for sector spreading in the market rather than index investing. Especially if a stock price correction occurs in October, another opportunity for low-point buying may arise, it is advised.

In the semiconductor MC&E (materials, components, and equipment) sector, polarization is appearing between specific components like probe cards and general equipment stocks. Therefore, it may be more advantageous to use semiconductor sector ETFs like Tiger Semiconductor or Kodex rather than selecting individual stocks. It should also be considered that MC&E investment is effective only when the movements of Samsung Electronics and SK hynix precede it.

It is anticipated that the semiconductor market's oversupply will be resolved, and supply and demand will balance out around 2029. While increased capacity is expected to start reflecting in the market around 2028, full supply-demand parity is analyzed to occur after that. Although profit growth is expected to slow, earnings growth is projected to continue.

This AI cycle differs from the past dot-com bubble in that it is not merely corporate competition but also inter-state competition, and further, a battle over who monopolizes information. Intervention by the US and Chinese governments acts as a major variable, with China attempting to expand AI influence through an open-source strategy. The US is also strengthening its own AI ecosystem, and due to these structural characteristics, the AI cycle is likely to last longer than in the past.

Considering the stage where AI goes beyond merely operating on computers to deeply entering real life, such as the mass production of Tesla Optimus and the commercialization of autonomous driving, the AI cycle could last longer than expected. Stock prices are anticipated to show a gradual upward trend, with fluctuations rather than a straight ascent. Like the NVIDIA case, profit growth will underpin the stock price.

Morgan Stanley raised Samsung Electro-Mechanics' target price to 3 million won. This is attributed to the MLCC (Multi-Layer Ceramic Capacitor) shortage caused by surging demand for AI servers and automotive electronics. However, excessive valuation based solely on a specific item's shortage should be cautious, as there is a strong correlation with trends in front-end industries like Samsung Electronics and SK hynix. It is highly likely to be linked to the overall electronics industry trend due to its strong cyclical nature within tech stocks.

Semiconductor MC&E stock prices are highly likely to be subordinate to Samsung Electronics' stock price trends, along with their peer values. For unparalleled profit growth, large-scale CAPEX (capital expenditure) is necessary, and the MC&E sector can receive a strong drive when Samsung Electronics plays a leading role. Therefore, the pattern of MC&E moving in tandem when the front-end chips move is expected to repeat.

In the past, there were instances where semiconductor equipment stocks recorded P/E (price-to-earnings) ratios as high as mid-40s. This can serve as a counter-argument to current concerns about MC&E overvaluation. Since MC&E stock prices have been suppressed while Samsung Electronics' stock experienced a stagnation period, there is potential for revaluation in the future, according to analysis.

The price of lithium carbonate is showing signs of rebound from its bottom, acting as a trigger for secondary battery stock price increases. Technical rebound attempts, including a long bullish candlestick on Friday, are being observed. Analysis suggests that the rise in lithium prices is acting as a catalyst driving a general rebound in the secondary battery sector.

Samsung SDI secured cash by selling a 5% stake in Samsung Display (SDC). In addition, it is streamlining joint ventures to focus on ESS (Energy Storage System) production and transitioning strategically from NCM (nickel, cobalt, manganese) batteries to LFP (lithium, iron, phosphate) as it undergoes a business transformation.

In the case of LG Energy Solution, analysis suggests that profitability in the ESS (Energy Storage System) sector was lower than expected, virtually operating at a loss excluding AMPC (Advanced Manufacturing Production Tax Credit). Critics point out that further orders and proof of profitability are needed for substantial earnings improvement.

While the bottom for the secondary battery sector has been confirmed, a full-scale rally is unlikely in the second half; instead, it's expected to show range-bound movement within a certain 구간. Substantial profits for major companies like POSCO Holdings are anticipated to be concentrated next year rather than this year. Therefore, it is advisable to approach investment after the second half when the weather cools down.