Brokerage : Hana Securities
Analyst : Kim Min-kyung
Investment Rating : BUY (Maintained)
Target Price : KRW 3,000,000 (Maintained)
Core Momentum : Structural earnings leverage driven by pricing gains and high-end product mix improvements across MLCC and FCBGA segments amid tight supply constraints and robust AI server demand
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained) / Target Price KRW 3,000,000 (Maintained) (Closing price KRW 1,274,000 as of August 10, 2026)
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2025 KRW 11.3144 Trillion → 2026(E) KRW 14.5744 Trillion (+28.8% YoY) → 2027(E) KRW 17.7787 Trillion (+22.0% YoY)
- Operating Profit (KRW): 2025 KRW 913.4 Billion → 2026(E) KRW 2.0312 Trillion (+126.9% YoY) → 2027(E) KRW 4.3325 Trillion (+113.3% YoY)
- Operating Profit Margin (OPM): 2025 8.1% → 2026(E) 13.9% → 2027(E) 24.4%
- Net Profit (Controlling) (KRW): 2025 KRW 706.1 Billion → 2026(E) KRW 1.6104 Trillion → 2027(E) KRW 3.2822 Trillion
- EPS: 2025 KRW 9,099 → 2026(E) KRW 20,752 → 2027(E) KRW 42,503
- Valuation Multiples (PER / PBR / ROE):
- 2025: PER 28.05x, PBR 2.06x, ROE 7.73%
- 2026(E): PER 61.39x, PBR 8.79x, ROE 15.58%
- 2027(E): PER 29.23x, PBR 6.81x, ROE 26.47%
🚀 2. [Market Opportunities & Business Outlook]
- MLCC Segment (Component Solutions):
- LTA Strategy & Pricing: Finalized 10 LTAs with over 10 additional client negotiations underway. Strategy focuses on keeping the LTA volume ratio measured to maximize price leverage in the tighter spot/distribution markets.
- ASP Hike: Implemented price hikes of 10% in June and 30% in August for distribution channel volumes. Persistent supply tightness provides room for broader contract price negotiations.
- Industry Conditions & Capacity: High industry BB ratios recorded in Q2 (Murata 1.47, Taiyo Yuden 1.72). The commercial operation of the new Philippine plant has been pulled forward from 2H27 to 1H27, yet annual capacity expansion will remain limited to around 20%, keeping supply-demand tight through 2027.
- Segment Forecast: Revenue projected to rise from KRW 5.1985 Trillion in 2025 to KRW 7.1924 Trillion in 2026(E) and KRW 9.7402 Trillion in 2027(E). Operating profit projected to expand from KRW 621.3 Billion in 2025 to KRW 1.3000 Trillion in 2026(E) and KRW 3.2603 Trillion in 2027(E) (2027(E) OPM reaching 33.5%).
- FCBGA Segment (Package Solutions):
- Utilization: Full capacity utilization expected starting in 2H 2026.
- Mix Shift: Following the ramp-up of switch substrates in 1H26, expanded deliveries for AI accelerators and server CPUs will push server/network revenue share above 60% in 2H26.
- Capex & Expansion: Domestic and overseas capacity expansions are planned with significant funding anticipated from customer prepayments/advances. Supplemental investments in 2027 will precede full operation of new lines in 1H 2028.
- Segment Forecast: Revenue projected to grow from KRW 2.3018 Trillion in 2025 to KRW 3.4024 Trillion in 2026(E) and KRW 3.8816 Trillion in 2027(E), with Operating Profit rising from KRW 141.6 Billion in 2025 to KRW 565.7 Billion in 2026(E) and KRW 914.2 Billion in 2027(E) (2027(E) OPM 23.6%).
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional commodity component supplier vulnerable to IT demand cycles, but as an essential high-value hardware platform capitalizing on strong pricing power and substantial margin leverage in high-end MLCCs and FCBGAs driven by the AI server boom. This perspective places strategic weight on high-margin product mix expansion and deliberate contract structuring under industry-wide supply bottlenecks, rather than aggressive volume expansions.
To evaluate whether this investment thesis unfolds as anticipated, key checkpoints include the spillover of channel price hikes into broader direct-contract ASP increases, the attainment of a 60%+ revenue share in server/network FCBGAs along with customer prepayment realizations, and the margin trajectories of the Component division through the early ramp-up of the Philippine facility. Progress on these operational factors can be monitored through the company’s upcoming earnings calls, investor relations disclosures, and official periodic regulatory filings.
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