Samsung Electronics, Down 49% From Peak, Seen Starting Uptrend as Shareholder Returns May Reach $507 Billion

KB Securities said on August 12 that Samsung Electronics Co. shares have fallen 49% from their peak, leaving the stock at 4.0 times 12-month forward price-to-earnings, and that the correction appears to be ending as an uptrend begins.

Kim Dong-won, head of research at the brokerage, said one reason is that OpenAI, which is preparing to go public, could raise substantial funds through an initial public offering as early as this year. That would likely ease market concerns over the AI investment cycle and the sustainability of spending, factors that had weighed on sentiment.

He added that much of the excessive margin-driven selling that triggered the stock's sharp decline in June and July has been cleared, suggesting the short-term correction tied to market flows has largely run its course. A large shareholder return plan due to be announced soon could also serve as a powerful catalyst for further gains.

KB Securities said memory supply shortages will persist for at least three years through 2028. Kim said big tech customers' memory demand fulfillment rate stood at only about 60% this month, with shortages worsening rather than easing. Demand that cannot be met this year because it exceeds supply capacity will likely be pushed into next year, while unmet demand next year could be deferred again into 2028, creating a chain effect of delayed orders.

By contrast, he said, completing a new memory production line takes at least three years, making a near-term expansion of supply unrealistic. On that basis, memory shortages are set to continue for at least three years through 2028.

KB Securities also said a large shareholder return program could trigger a rally in the stock. Kim said Samsung shares fell more than 40% from a prior peak four times between 2000 and 2026: 47% in 2008, 47% in 2022, 44% in 2024 and 49% in 2026.

In the previous three cases -- 2008, 2022 and 2024 -- the stock rebounded one month, three months and six months after forming a bottom, with the maximum gain reaching 60%, he said. Historically, declines of more than 40% from a peak have marked the starting point for a medium- to long-term rebound, according to the brokerage.

Kim said the new shareholder return policy expected soon could increase annual shareholder returns to more than 10 times the current 9.8 trillion won, or about $7.1 billion. Over the next three years, total shareholder returns are estimated at 600 trillion won to 700 trillion won, or about $434.8 billion to $507.3 billion, with dividend yield based on cash dividends projected at 7% to 15%.

Large-scale shareholder returns would drive both a valuation rerating and a rise in the stock price, Kim said. Given that backdrop, the 49% decline from the peak suggests the correction has run its course and marks the start of an uptrend.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com