Although Samsung Electronics and SK Hynix are expected to record their highest-ever earnings in the third quarter of this year, their stock prices have instead entered a phase of historical undervaluation. Amid concerns over a slowdown in the memory semiconductor industry weighing on investor sentiment, voices are emerging that a new shareholder return policy is needed for the stocks to rebound.
According to the electronics industry on the 26th, SK Hynix is scheduled to announce its third-quarter earnings on the 28th, and Samsung Electronics will follow on the next day, the 29th. Samsung Electronics announced a preliminary operating profit of 107.4 trillion won in early this month, while the operating profit expected by securities firms for SK Hynix is approximately 77 trillion won.
The two companies are projected to record unprecedented results, with their combined operating profit over just three months reaching approximately 184 trillion won. In particular, Samsung Electronics became the first global big tech company to surpass 100 trillion won in quarterly operating profit. SK Hynix's expected operating profit margin reaches 78%. This means that for every 1 million won in sales, 780,000 won is retained as profit.
However, despite such results, the stocks have failed to escape weakness. Compared with the end of June, Samsung Electronics and SK Hynix shares have fallen by 36.2% and 51.9%, respectively (based on the closing price on the 26th). On that day, market capitalization stood at 1,377 trillion won for Samsung Electronics (including preferred shares) and 931 trillion won for SK Hynix.
Considering that the expected net income for next year is 454 trillion won for Samsung Electronics and 332 trillion won for SK Hynix, respectively, the price-to-earnings ratio (PER) is at a level of about three times. Securities firms analyze that future earnings generation capacity has not been fully reflected in stock prices, leading to an entry into a historically undervalued range.
Kim Dong-won, head of the research division at KB Securities, assessed in a report on the 26th that "the PERs of Samsung Electronics and SK Hynix have fallen to around three times, creating an extreme divergence between earnings and stock prices, and entering an undervaluation phase comparable to past financial crises." Ryu Hyung-geun, a researcher at Daishin Securities, also stated that "even assuming a scenario where (DRAM) prices fall by 50%, current stock prices are excessively undervalued."
For this reason, calls for concrete measures to enhance shareholder value are growing. Samsung Electronics and SK Hynix are expected to announce their shareholder return policies alongside these earnings releases.
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