The time it took for Samsung Electronics and SK Hynix to plummet and recover | Chesley Investment Advisory [Morning Brief / 26.07.31.Fri]
[Highlight] The time it took for Samsung Electronics, SK Hynix to plummet and recover | Chesley Investment Advisory [Morning Brief / 26.07.31.Fri]
Speakers
Choi Ho
— Vice President
Park Se-ik
— CEO, ex-Chief Strategist
Summary
The hosts analyze two underperforming large-cap Korean IT stocks. For Samsung Electronics, the Q2 conference call was the best in recent memory, with memory supply shortage expected through 2028 and shareholder returns approaching. Samsung Electro-Mechanics posted record results but fell 14% after the release; the host's valuation suggests significant upside from the MLCC cycle.
- Samsung Electronics Q2 DRAM/NAND ASP surged and Q3 guidance was raised, with operating profit expected to keep rising.
- Memory supply tightness is forecast to persist until 2028 due to long lead times, high demand, and long-term contracts.
- Management confirmed plans for a special dividend and large buybacks at the end of the 3-year shareholder return policy.
- Samsung Electro-Mechanics delivered record revenue and operating profit, driven by MLCC strength in server and auto sectors.
- Despite the strong results, the stock plunged 14% on the day due to profit‑taking and ETF selling pressure.
- The host’s model projects MLCC profits rising sharply on ASP hikes and high utilization, with a fair market cap far above the current depressed 65 trillion won.
- Both stocks are presented as deep-value opportunities with catalysts in earnings and shareholder returns.
Ideas
Strong earnings, supply shortage, shareholder returns.
Samsung Electronics posted strong Q2 results with DRAM and NAND ASP surging; Q3 bit growth guidance was raised, and operating profit is expected to rise to 115 trillion won in Q3 and continue increasing annually. The company sees memory supply shortages persisting through 2028 due to long lead times and strong demand visibility from long-term supply contracts with major customers. Additionally, nearing the end of the 3-year shareholder return policy, management confirmed plans for a special dividend and large buybacks, which the market welcomed. Combined with supply tightness and improving HBM competitiveness, this drives a compelling earnings and capital-return story.
Record earnings, MLCC upturn, large upside.
Samsung Electro-Mechanics reported record revenue and operating profit, beating high expectations. The MLCC business is seeing a favorable mix shift toward high-value server and automotive applications, driving ASP and utilization higher. Analyst estimates are being sharply raised. The speaker's own model shows MLCC operating profit rising significantly with ASP increases and utilization near 95%, implying a market cap of 100–110 trillion won, well above the current 65 trillion won after a 14% sell-off the day after earnings, creating a large upside opportunity.
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