South Korea: KB Securities Report on October 26 Says Samsung and SK hynix Price-to-Earnings Ratios Have Fallen to About 3 Times, an Undervaluation Comparable to the Financial Crisis Era
KB Securities, a leading South Korean brokerage, said in a report released on October 26 that the current share prices of Samsung Electronics and SK hynix are undervalued to a degree comparable with the period of the global financial crisis: the two companies' profits have surged sharply, but their share prices have failed to keep pace with the profit growth. The report noted that although the share prices of Samsung Electronics and SK hynix have risen 65% and 88% respectively so far this year, as of the close on October 23, the two companies' share prices were 36% and 52% below their late-June highs respectively, and their price-to-earnings ratios had fallen to about 3 times. Kim Dong-won, head of research at KB Securities, said in the report that an extreme divergence has appeared between profits and share prices, and that the market should now focus on future profit growth and the possibility of a valuation recovery rather than the pessimism already reflected in share prices. KB Securities expects the combined operating profit of Samsung Electronics and SK hynix this year and next to reach 1,571 trillion won, 2.1 times the two companies' cumulative operating profit of 748 trillion won over the 26 years from 2000 to 2025; of this, Samsung Electronics' operating profit next year is forecast at 555 trillion won and SK hynix's at 389 trillion won, up 51% and 50% year on year respectively. The report also noted that about 70% to 80% of the memory chips the two companies will produce next year have already been locked in by buyers through five-year long-term agreements with global large technology companies. Foreign investors currently hold 46.1% of Samsung Electronics and 48.8% of SK hynix, both the lowest levels since the 2008 financial crisis. KB Securities believes market concerns about the super intelligence industry have passed their peak and entered an easing phase. The two companies will release their third-quarter earnings this week, with combined operating profit expected to reach 184.4 trillion won.
Source: GSM · USA (original Chinese edition)
Photo: 首尔市景（资料图），取自 Wikimedia Commons。Photo: Seoul cityscape (file photo), via Wikimedia Commons.
