Samsung Electronics: Super-cycle confirmed by W100tn+ quarterly OP; bullish 2027-28 outlook

Samsung Electronics (SEC) posted robust 3Q26 OP of W107.4tn on 8 Oct. While broadly in line with our earlier forecast and consensus, the result confirms the super-cycle trend, with a 55% OPM (sales: W195.0tn, up 127% YoY). Key drivers were likely memory ASPs (DRAM/NAND: +23%/+20% QoQ) and OPMs (75%/65%). Among businesses, memory contributed W110.4tn, logic/foundry -W1.8tn, display W1.0tn and DX -W1.63tn; overall, memory contributed 100%+ of 3Q OP. We lift 2027-28E EPS by +3% on DRAM & NAND ASPs that are ~9% higher than earlier assumptions, and expect DRAM ASPs to rise gradually through 2027 quarters. Our 4Q OP forecast remains unchanged at W117tn. Annual FCF can easily exceed W300tn, allowing W150tn+ (50% of FCF) to be allocated to shareholder returns. Reiterate BUY with PO of 500,000 KRW, based on the memory super-cycle, active shareholder returns and a low P/E.