Brokerage : DS Investment & Securities
Analyst : Daehyung Cho (dh.cho@ds-sec.co.kr)
Investment Rating : BUY (Maintained)
Target Price : KRW 1,600,000 (Raised)
Core Momentum : Structural upward revisions in earnings forecasts and extended cycle visibility driven by MLCC price leverage, capacity cannibalization, and new Big Tech FC-BGA order expansion
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained) / Target Price KRW 1,600,000 (Raised) (Closing price KRW 879,000 as of July 30, 2026; upside potential 82.0%)
- Valuation Basis: Applied average 2027(E) PER multiple of 42.6x of peer group to 2027(E) EPS
- Estimate Upgrades: 2026 and 2027 operating profit forecasts raised by 34.5% and 47.6% to KRW 1.9748 Trillion and KRW 3.1022 Trillion, respectively
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2024 KRW 10.294 Trillion → 2025 KRW 11.314 Trillion → 2026(E) KRW 14.599 Trillion → 2027(E) KRW 18.630 Trillion
- Operating Profit (KRW): 2024 KRW 735.0 Billion → 2025 KRW 913.0 Billion → 2026(E) KRW 1.975 Trillion → 2027(E) KRW 3.102 Trillion
- Operating Profit Margin (OPM): 2024 7.1% → 2025 8.1% → 2026(E) 13.5% → 2027(E) 16.7%
- Net Profit (Controlling) (KRW): 2024 KRW 679.0 Billion → 2025 KRW 706.0 Billion → 2026(E) KRW 1.701 Trillion → 2027(E) KRW 2.665 Trillion
- EPS (KRW): 2024 KRW 9,022 → 2025 KRW 9,362 → 2026(E) KRW 23,309 → 2027(E) KRW 36,560
- Valuation Multiples (PER / PBR / ROE):
- 2024: PER 13.7x, PBR 1.1x, ROE 8.2%
- 2025: PER 27.2x, PBR 2.1x, ROE 7.7%
- 2026(E): PER 37.7x, PBR 6.2x, ROE 16.6%
- 2027(E): PER 24.0x, PBR 5.1x, ROE 21.9%
- 2Q 2026 Preliminary Results (2Q26P):
- Revenue: KRW 3.4572 Trillion (+24.2% YoY)
- Operating Profit: KRW 440.4 Billion (+106.8% YoY, OPM 12.7%, beating consensus of KRW 406.1 Billion)
🚀 2. [Market Opportunities & Business Outlook]
- MLCC Segment (Component):
- Pricing & Operating Leverage: Following the initial price hikes in June, additional price hikes scheduled for August are expected to sustain margin leverage.
- LTA Contracts: Secured approximately 10 LTAs (over 1-year terms) with global Big Tech, including recent contracts worth KRW 295.0 Billion and KRW 454.0 Billion. Non-fixed contract pricing allows additional ASP increases to be passed through.
- Supply Bottlenecks & Long-Term Cycle: Near-full utilization across major suppliers combined with capacity cannibalization from high-value products is exacerbating supply shortages and extending the upcycle duration.
- FC-BGA Segment:
- Supply & Capacity: Expanding client base by initiating supply of new products for AI data center network applications with new Big Tech customers.
- Expansion Outlook: Production capacity through 2027 is essentially fully allocated; concurrent existing-line optimization and large-scale capex expansions could materialize faster and larger than market expectations.
- Mid-to-Long Term Drivers:
- Application diversification into humanoid robotics and advanced hardware expected to add long-term growth momentum.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not just as experiencing a temporary cyclical rebound, but as a premier hardware supplier entering a prolonged upcycle characterized by steep upward earnings revisions, driven by structural capacity cannibalization and robust pricing power in high-value products. This perspective highlights the company’s favorable contract structures—combining fully booked capacity through 2027 with non-fixed-price LTAs—which allow it to compound the benefits of rising ASPs and expanding shipment volumes.
To evaluate whether this investment thesis continues to materialize, key verification checkpoints include the implementation and magnitude of the planned August MLCC price hikes, the realization of flexible pricing pass-through across existing LTAs, shipment volume trends of AI data center network FC-BGAs to new Big Tech clients, and the timing and scale of subsequent capacity expansions. These developments can be tracked through upcoming quarterly earnings releases, investor relations presentations, and official regulatory filings.
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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