Brokerage : Daishin Securities
Analyst : Kang-ho Park, Ji-won Seo (RA)
Investment Rating : BUY (Maintained)
Target Price : KRW 550,000 (Raised)
Core Momentum : Earnings expansion and valuation re-rating projected on the back of high-margin mix improvements and potential ASP increases across FC-BGA and MLCC from 2Q26 onward
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; 6-month Target Price raised by 57.1% to KRW 550,000 (vs. current price of KRW 437,000).
- Valuation Methodology: Applied a target P/E multiple of 37.8x (upper end of historical growth cycle) to 2026F EPS of KRW 14,569 (+12.1% upward revision).
- 1Q26 Earnings Forecast (Preview):
- Revenue: KRW 3.06 Trillion (+11.7% YoY, +5.4% QoQ; analyst model at KRW 3.058 Trillion).
- Operating Profit: KRW 271.3 Billion (+35.3% YoY, +13.3% QoQ; analyst model at KRW 271.0 Billion).
- Highlights: While reported operating profit may slightly miss consensus (KRW 288.6 Billion) due to one-off business provisions, underlying operating profit is estimated to beat consensus by over 10% when excluding one-offs, supported by high-margin sales growth, yield gains, and favorable FX rates.
- 2Q26 Outlook:
- Revenue: KRW 3.074 Trillion (+10.4% YoY, +0.5% QoQ).
- Operating Profit: KRW 352.0 Billion (+65.4% YoY, +29.9% QoQ; revised up by 16.4%).
- Net Profit: KRW 284.0 Billion (+119.1% YoY, +26.9% QoQ).
- Annual Financial Projections (2026F – 2028F):
- 2026F: Revenue KRW 12.712 Trillion (all-time high) / Operating Profit KRW 1.411 Trillion (+54.5% YoY, highest since 2022, revised up by 12.1%) / Controlling Net Profit KRW 1.131 Trillion
- 2027F: Revenue KRW 13.802 Trillion / Operating Profit KRW 1.664 Trillion (+17.4% revision) / Controlling Net Profit KRW 1.297 Trillion
- 2028F: Revenue KRW 14.219 Trillion / Operating Profit KRW 1.715 Trillion / Controlling Net Profit KRW 1.342 Trillion
- Key Financial Multiples (2026F):
- EPS: KRW 14,569 (+12.1% revision)
- P/E: 29.3x / P/B: 3.2x
- ROE: 11.2% / Operating Margin (OPM): 11.1%
🚀 2. [Market Opportunities & Business Outlook]
- Package Solutions Division (FC-BGA):
- 2026 FC-BGA revenue projected at KRW 1.68 Trillion (+44.4% YoY), marking the fastest growth rate across all divisions.
- The share of FC-BGA within total substrate revenue is expected to expand from >50% in 3Q25 to 60% by 4Q26.
- Robust order intake across global ASIC and HBM clients driving rapid top-line growth in data center and AI applications.
- Capacity utilization is projected to approach 95–100% by 4Q26, maximizing product mix benefits in 2027. If additional CapEx is executed, commercial production is estimated for 2028, sustaining solid profitability through price increases, high-margin mix, and yield improvements.
- Component Division (MLCC):
- Sustained demand strength in industrial and automotive segments alongside rising order momentum for miniature, high-capacitance components.
- Profitability is expected to expand from 2Q26 onward backed by ~95% capacity utilization.
- Rising probability of price hikes in 2H26 for industrial MLCC (low-power, high-capacitance AI infrastructure); with production capacity shifting toward automotive/industrial segments, incremental demand is expected to transition into a pricing upcycle.
- Physical AI & Valuation Re-rating:
- Benefiting from structural paradigm shifts toward AI, autonomous driving, and Physical AI (humanoid robotics), narrowing market share gaps with Japanese peers.
- Reflecting the 1–2 year lead time required for new CapEx additions, the probability of price increases across MLCC and FC-BGA is expected to rise through 2026–2027.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional passive parts supplier vulnerable to consumer IT demand fluctuations, but as a critical AI hardware beneficiary closing the market share gap with global market leaders amid the expansion of data center AI and Physical AI (autonomous driving, robotics). Rather than focusing on short-term first-quarter business provisions, the analytical perspective places greater strategic significance on potential ASP increases across FC-BGA and MLCC lines from 2Q26 onward, high capacity utilization exceeding 95%, and structural profit growth powered by high-margin product mix enrichment.
To assess whether this investment thesis continues to materialize, key tracking points include the actual realization of blended ASP improvements across FC-BGA and MLCC from 2Q26 onward, FC-BGA capacity utilization reaching 95–100% alongside a 60% revenue share within substrates by 4Q26, and the progression toward achieving projected annual operating profit (KRW 1.41 Trillion) supported by expanding AI infrastructure demand. These variables 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.
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