Although Samsung Electronics and SK Hynix are expected to post record-high earnings side by side 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 stock prices to rebound.
According to the electronics industry on the 26th, SK Hynix will announce its third-quarter earnings on the 28th, while Samsung Electronics will do so the following day, the 29th. Samsung Electronics announced a preliminary operating profit of 10.74 trillion won in early this month. The operating profit expected by securities firms for SK Hynix is approximately 7.7 trillion won.
It appears that an unprecedented figure will emerge, with the two companies having earned a combined operating profit of approximately 18.4 trillion won in just three months. In particular, Samsung Electronics became the first among global big tech (large IT companies) to surpass 10 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 performance, stock prices have failed to escape weakness. Compared with the end of June, the stock prices of Samsung Electronics and SK Hynix have fallen by 36.2% and 51.9%, respectively (based on closing prices on the 26th). On that day, the market capitalization was 137.7 trillion won for Samsung Electronics (including preferred shares) and 93.1 trillion won for SK Hynix.
Considering that the expected net income for next year is 45.4 trillion won for Samsung Electronics and 33.2 trillion won for SK Hynix, respectively, the P/E ratio (price-to-earnings ratio) stands at a level of about three times. Securities firms analyze that future earnings-generating capacity has not been fully reflected in stock prices, leading to an entry into a historically undervalued range.
In a report on the 26th, Kim Dong-won, head of the Research Division at KB Securities, assessed that "the P/E ratios of Samsung Electronics and SK Hynix have fallen to around three times, resulting in an extreme divergence between earnings and stock prices, and entering an undervaluation phase comparable to past Financial Services Commission-era levels."
Ryu Hyung-geun, a researcher at Daishin Securities, also stated that "even assuming a scenario where (DRAM) prices fall by 50%, current stock prices represent excessive undervaluation."
For this reason, calls are growing for concrete measures to enhance shareholder value. Samsung Electronics and SK Hynix are expected to announce their shareholder return policies alongside their earnings announcements.
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