Brokerage : iM Securities
Analyst : Eui-young Ko
Investment Rating : Buy (Maintained)
Target Price : KRW 600,000 (Maintained)
Core Momentum : Earnings sustainability and upward forecast revisions driven by server-led MLCC mix improvements, selective order-taking, and the expanding impact of FC-BGA price hikes
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy maintained; 12-month Target Price maintained at KRW 600,000 (Upside: 31.6%).
- Valuation Methodology: Applied a 4.1x P/B multiple (a 50% premium over the 2018 peak P/B), representing ~20x 2027F P/E.
- 1Q26 Earnings Forecast:
- Operating Profit: KRW 263.1 Billion (-6% vs. 3-month consensus, but +11% above consensus when excluding one-off costs).
- MLCC capacity utilization surpassed 90% (nearing full utilization), enabling a selective order-taking environment for high-margin products.
- 2Q26 Earnings Forecast:
- Projected Operating Profit: KRW 350.5 Billion (+14% upward revision, beating consensus by 7%).
- Annual Financial Projections (2026E – 2028E):
- 2026E: Revenue KRW 12.772 Trillion / Operating Profit KRW 1.473 Trillion (+7% revision) / Net Profit KRW 1.163 Trillion
- 2027E: Revenue KRW 14.449 Trillion / Operating Profit KRW 2.257 Trillion (+4% revision) / Net Profit KRW 1.803 Trillion
- 2028E: Revenue KRW 15.460 Trillion / Operating Profit KRW 2.780 Trillion / Net Profit KRW 2.235 Trillion
- Key Financial Multiples (2026E):
- EPS: KRW 14,983 / BPS: KRW 137,449
- P/E: 30.4x / P/B: 3.3x
- ROE: 11.5%
- EV/EBITDA: 13.5x / Dividend Yield: 0.7%
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC):
- Server-centric product mix improvements are driving rapid profitability expansion even prior to broad-based price increases.
- Supply-demand balance for commodity MLCC is expected to tighten long term as industry capacity shifts toward surging AI server demand.
- The analyst establishes a base-case assumption where Murata makes pricing decisions in 2Q26 and raises prices in 3Q26, followed by price hikes from Samsung Electro-Mechanics (every 10% price increase is estimated to boost 2027 operating profit by ~KRW 600 Billion).
- Package Solutions Division (FC-BGA):
- Implemented ~10% price increases for select FC-BGA customers in March.
- Price hike coverage is expected to expand gradually across client bases and product line-ups, accelerating 2Q26 profitability.
- Second-half earnings expectations are rising sharply as multiple new customer projects transition into mass production.
- Earnings Sustainability & Multiple Expansion:
- Transitioning from a typical volatile cyclical model into a sustainable “plateau-type” earnings structure, supported by the data center demand pivot and duopoly structure with Murata.
- Both MLCC and FC-BGA divisions share synchronized long-term AI-driven visibility.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional cyclical parts manufacturer exposed to consumer hardware fluctuations, but as a high-value AI hardware beneficiary capable of sustaining high-level “plateau” earnings through structural data center demand and duopolistic market dominance. The underlying perspective places greater strategic significance on selective high-margin order-taking enabled by 90%+ utilization, rapid profitability gains driven purely by product mix upgrades, and expanding pricing pass-through across FC-BGA lines rather than simple shipment volume growth.
To assess whether this investment thesis continues to materialize, key tracking points include the expansion of FC-BGA price hikes across wider customer accounts, quarterly operating margin expansion in the Component division via selective order-taking, and the verification of the analyst’s base-case scenario where Murata executes price increases in 3Q26 followed by Samsung Electro-Mechanics. These developments can be verified through upcoming quarterly earnings releases, official company IR presentations, periodic regulatory filings (quarterly and annual reports), and DART disclosures.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
