Brokerage : Hana Securities
Analyst : Min-kyung Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 810,000 (Raised)
Core Momentum : Mid-to-long term earnings growth projected on the back of an emerging MLCC pricing upcycle and structural FCBGA supply constraints driving high-margin product mix improvements
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; 12-month Target Price raised to KRW 810,000 (vs. current price of KRW 639,000).
- Valuation Methodology: Applied a 2027F target P/E multiple of 35.4x (peer average of Ibiden and Unimicron) to 2027F EPS of KRW 22,874.
- Annual Financial Projections (2026F – 2027F):
- 2026F: Revenue KRW 13.1013 Trillion / Operating Profit KRW 1.4839 Trillion / Pre-tax Profit KRW 1.5022 Trillion / Net Profit KRW 1.1742 Trillion
- 2027F: Revenue KRW 15.3197 Trillion / Operating Profit KRW 2.2787 Trillion (+36% upward revision) / Pre-tax Profit KRW 2.2997 Trillion / Net Profit KRW 1.7750 Trillion
- Key Financial Indicators (2026F):
- EPS: KRW 15,131 (+66.29% YoY)
- P/E: 42.23x
- P/B: 4.64x
- ROE: 11.69%
- EV/EBITDA: 19.91x
- BPS: KRW 137,691
- DPS: KRW 2,350
🚀 2. [Market Opportunities & Business Outlook]
- MLCC Division (Component):
- The analyst assesses that the market entered the initial phase of an MLCC price increase cycle in 2Q26.
- Price hike announcements by Japanese peers (Taiyo Yuden in May across MLCC lines, Murata in April for inductors) indicate a favorable market environment allowing raw material cost pass-through.
- Profitability remains in the low-to-mid 10% range, indicating that the pricing upcycle is still in its early stages compared to the 2017–2018 cycle.
- High-voltage and high-capacitance MLCC supply is expected to tighten further from 2027, driven by 1MW+ AI server rack adoption and 800V HVDC power infrastructure transitions.
- FCBGA Substrates (Package Solution):
- Structural shortages are projected to intensify starting in 2H26.
- Surging demand for AI accelerators and server CPUs, combined with larger substrate sizes and higher layer counts, is causing practical capacity loss (Capa Loss), keeping facilities at full utilization.
- Short-term supply bottlenecks are expected to persist as new capacity additions are not projected to meaningfully contribute to revenue until after 2028.
- Expanding Addressable Markets:
- Demand originating from AI servers is expanding into network and satellite domains for Agentic AI infrastructure, prolonging the structural growth cycle.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a passive component supplier sensitive to IT set volume demand, but as a critical AI hardware beneficiary securing both pricing power and mix enrichment under structural supply constraints. The underlying perspective places greater strategic significance on entering a cost-pass-through MLCC price hike cycle and practical capacity constraints in large-area, high-layer FCBGA substrates rather than simple unit volume expansion.
To assess whether this investment thesis continues to materialize, key tracking points include the sustained full capacity utilization of FCBGA lines through 2H26, the realized ASP increase across MLCC product lines, and the progression of 2027 operating profit expansion (projected at KRW 2.2787 Trillion) supported by high-voltage AI server demand. These developments can be verified through upcoming quarterly earnings releases, official company IR presentations, periodic regulatory filings (quarterly and annual reports), and DART disclosures.
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