Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 530,000 (Raised)
Core Momentum : Upward earnings forecast revisions driven by profitability improvements from FC-BGA price hikes and structural premium expansion in high-spec AI server MLCCs
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; Target Price raised by 6% to KRW 530,000 (from KRW 500,000; Upside: 23.5%).
- Valuation Rationale: Reflects upward earnings revisions driven by FC-BGA ASP hikes and rising capacity utilization supported by AI server MLCC demand.
- 1Q26 Earnings Forecast:
- Revenue: KRW 3.0 Trillion (+11% YoY, slightly beating consensus).
- Operating Profit: KRW 265.5 Billion (+45% YoY, reflecting one-off costs).
- Normalized Profit: Estimated to exceed KRW 320.0 Billion when excluding one-off expenses.
- Annual Financial Projections (2026F – 2027F):
- 2026F: Revenue KRW 12.778 Trillion / Operating Profit KRW 1.481 Trillion / Net Profit KRW 1.248 Trillion
- 2027F: Revenue KRW 14.289 Trillion / Operating Profit KRW 1.966 Trillion / Net Profit KRW 1.640 Trillion
- Package Substrate Division Profit Forecast (Reflecting +10% FC-BGA ASP Revision):
- 2026F Operating Profit: KRW 386.1 Billion (+185% YoY)
- 2027F Operating Profit: KRW 504.6 Billion (+41% YoY)
- Key Financial Indicators (2026F):
- EPS: KRW 16,085
- P/E: 26.7x
- P/B: 3.5x
- ROE: 12.4%
- Operating Margin (OPM): 11.6%
- Dividend Yield: 0.4%
🚀 2. [Market Opportunities & Business Outlook]
- Package Substrate Division (FC-BGA):
- FC-BGA ASP revised up by +10%, with raw material price increases (such as CCL) and tight supply conditions translating directly into realized price increases amid sold-out capacity.
- With the raw-material portion of FC-BGA at around 20%, the analyst highlights operating leverage emerging from proprietary stacking know-how in a tight market environment.
- Supply bottlenecks in T-glass fiberglass (a core raw material for CCL) are expected to sustain FC-BGA price hike momentum into 2H26.
- Full capacity sell-outs are projected from 2H26 onward amid inevitable capacity expansion needs, with follow-on price increase negotiations proceeding favorably.
- Component Division (MLCC):
- Extended lead times confirmed across major MLCC vendors.
- Narrowing form factors in NVL racks are driving rapid adoption of miniature, high-voltage MLCCs.
- Due to the scarce number of suppliers capable of mass-producing miniature high-voltage specifications, the price trend represents a structural premium expansion rooted in advanced tech specs rather than simple supply tightness.
- MLCC Price Increase Sensitivity Analysis (2026F incremental operating profit assuming preemptive AI server MLCC price hikes):
- +15% Price Increase: +KRW 100.8 Billion
- +20% Price Increase: +KRW 136.1 Billion
- +25% Price Increase: +KRW 169.7 Billion
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional passive parts supplier exposed to broader IT set cyclicality, but as a premier AI hardware beneficiary executing significant pricing power and operating leverage amid tight supply conditions and upstream material bottlenecks. Rather than focusing on short-term first-quarter one-off cost impacts, the analytical perspective places greater strategic significance on the +10% price hikes across fully booked FC-BGA lines and the structural technological premium commanded by miniature, high-voltage MLCCs in NVL rack architectures.
To assess whether this investment thesis continues to materialize, key tracking points include the realization of the projected KRW 386.1 Billion operating profit in the Substrate division following the 10% FC-BGA ASP hike, the continuation of sold-out FC-BGA utilization alongside follow-on pricing negotiations in the second half of the year, and the potential realization of the analyst’s modeled price hike scenarios for AI server MLCC lines. 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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