Brokerage : DS Investment & Securities
Analyst : Dae-hyung Cho (dh.cho@ds-sec.co.kr)
Investment Rating : BUY
Target Price : KRW 1,080,000 (Raised)
Core Momentum : Early phase of a structural component shortage cycle, anticipated 2H MLCC price hikes, and simultaneous Q and P expansion in FC-BGA from 2Q Big Tech AI networking shipments driving 2H full capacity and accelerated fab expansion
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY / Target Price KRW 1,080,000 (Raised) (Closing price KRW 832,000 as of April 30, 2026; upside potential 29.8%)
- Valuation Methodology: Applied a Target P/E multiple of 42.3x (peer average for 2027F) to 2027(E) EPS of KRW 25,510
- Annual Forecast Upgrades (2026E):
- 2026(E) Revenue raised by +5.3% to KRW 13.3862 Trillion (+18.3% YoY; summary table cites KRW 13.386 Trillion)
- 2026(E) Operating Profit raised by +14.8% to KRW 1.4683 Trillion (+60.8% YoY, 11.0% OPM; summary table cites KRW 1.468 Trillion)
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2023 KRW 8.892 Trillion → 2024 KRW 10.294 Trillion → 2025 KRW 11.314 Trillion → 2026(E) KRW 13.386 Trillion → 2027(E) KRW 15.876 Trillion
- Operating Profit (KRW): 2023 KRW 661.0 Billion → 2024 KRW 735.0 Billion → 2025 KRW 913.0 Billion → 2026(E) KRW 1.468 Trillion → 2027(E) KRW 2.102 Trillion
- Operating Profit Margin (OPM): 2023 7.4% → 2024 7.1% → 2025 8.1% → 2026(E) 11.0% → 2027(E) 13.2%
- Net Profit (Controlling) (KRW): 2023 KRW 423.0 Billion → 2024 KRW 679.0 Billion → 2025 KRW 706.0 Billion → 2026(E) KRW 1.301 Trillion → 2027(E) KRW 1.861 Trillion
- EPS (KRW): 2023 KRW 5,617 → 2024 KRW 9,022 → 2025 KRW 9,362 → 2026(E) KRW 17,796 → 2027(E) KRW 25,510
- Valuation Multiples (PER / PBR / ROE):
- 2023: PER 27.3x, PBR 1.5x, ROE 5.5%
- 2024: PER 13.7x, PBR 1.1x, ROE 8.2%
- 2025: PER 28.0x, PBR 2.1x, ROE 7.7%
- 2026(E): PER 46.8x, PBR 6.1x, ROE 13.0%
- 2027(E): PER 32.6x, PBR 5.3x, ROE 16.4%
- 1Q 2026 Performance (1Q26P):
- Revenue KRW 3.2091 Trillion (+17.2% YoY), Operating Profit KRW 280.6 Billion (+39.9% YoY, 8.7% OPM), meeting consensus of KRW 273.4 Billion despite one-off cost recognitions.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (Shortage Cycle Entry & MLCC Price Upside):
- High-End Mix & Shortage: Accelerated adoption of high-value MLCCs across AI servers and datacenters is driving the segment into an outright shortage environment.
- ASP & Utilization: Blended ASP sustained its QoQ upward trajectory with fab utilization consistently exceeding 90%.
- 2H26 Price Hike Potential: Anticipated price increases in 2H26, combined with product mix improvements, are expected to extend aggressive margin expansion through 2027.
- Package Solutions / FC-BGA (2Q AI Networking Catalyst & Full Utilization):
- 2Q26 Volume and Price Expansion: Commencing shipments of new products for Big Tech AI datacenter networking applications in 2Q26, initiating a phase of simultaneous expansion in volume (Q) and ASP (P).
- Server Shipments & Profitability: Increasing deliveries of server-centric FC-BGA substrates are boosting divisional profitability ahead of schedule, with initial 1Q price increases confirmed.
- Market Share & Capacity Expansion: Share gains within existing Big Tech accounts and the addition of new customers are projected to drive lines to theoretical full utilization in 2H26. Active reviews for new capacity expansion are underway, with the scale and timeline likely to be larger and faster than market consensus.
- Application Diversification:
- Medium-to-long term structural growth extending into humanoid robotics and physical AI hardware platforms.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a standard cyclical supplier recovering off trough multiples, but as an indispensable beneficiary entering the opening phase of a multi-year AI hardware shortage cycle across both MLCCs and FC-BGA substrates. This perspective looks past short-term quarterly noise to highlight the earnings leverage proven in 1Q26, the simultaneous Q and P expansion in Package Solutions driven by 2Q26 Big Tech AI networking shipments, potential 2H26 MLCC price hikes under 90%+ utilization, and an accelerated FC-BGA capacity expansion cycle, fully justifying a target price upgrade to KRW 1,080,000 using 2027 peer multiples (42.3x).
To evaluate whether this investment thesis unfolds as anticipated, key verification checkpoints include the realization of simultaneous Q and P expansion from 2Q26 Big Tech AI networking shipments in the Package division, the implementation of broad AI server MLCC price hikes in 2H26, achieving full FC-BGA capacity utilization in 2H26, and formal announcements regarding the scale and timeline of new FC-BGA fab expansions. Progress on these fronts can be tracked via upcoming quarterly earnings announcements, investor relations presentations, and periodic regulatory filings.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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