Brokerage : Kyobo Securities
Analyst : Bo-young Choi
Investment Rating : BUY (Maintained)
Target Price : KRW 600,000 (Raised)
Core Momentum : Multi-year earnings expansion projected on the back of favorable pricing conditions for B2B data center MLCCs and expanding NVSwitch FC-BGA demand driven by the Vera Rubin transition
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; Target Price raised to KRW 600,000 (vs. current price of KRW 427,500).
- Valuation Methodology: Derived by applying a target multiple of 31x (global peer average) to Target EPS of KRW 19,446.
- 1Q26 Earnings Forecast (Analyst Model):
- Revenue: KRW 3.0549 Trillion (+11.6% YoY, +5.6% QoQ; in line with KRW 3.0 Trillion consensus).
- Operating Profit: KRW 266.7 Billion (+33.0% YoY, +11.8% QoQ, OPM 8.7%; slightly below consensus of KRW 288.6 Billion due to ~KRW 50 Billion in one-off costs).
- Normalized Operating Profit: Estimated at KRW 316.7 Billion excluding one-offs, confirming solid underlying business fundamentals.
- Annual Financial Projections (2026E – 2027E):
- 2026E: Revenue KRW 12.6881 Trillion (+12.2% YoY) / Operating Profit KRW 1.410 Trillion (+54.6% YoY) / Net Profit KRW 1.279 Trillion.
- 2027E: Revenue KRW 14.3852 Trillion (+14.0% YoY) / Operating Profit KRW 1.959 Trillion (approaching KRW 2 Trillion, more than doubling in 2 years) / Net Profit KRW 1.510 Trillion.
- Key Financial Indicators (2026E):
- EPS: KRW 16,462 (+19.7% YoY)
- P/E: 26.0x / P/B: 3.1x
- ROE: 12.1% / Operating Margin (OPM): 11.1%
- EV/EBITDA: 14.3x
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC):
- Utilization gains and ASP growth supported by seasonal peak demand and expanding AI server shipments.
- Murata’s price hike initiative is transitioning from internal review into implementation; demand shift toward B2B data centers satisfies core prerequisites for price hikes (high utilization, robust demand, reduced inventory).
- Unlike past supply-shock-driven cycles, both P (price) and Q (quantity) are expanding simultaneously, enhancing cycle depth and duration.
- 2026 Component division revenue forecast at KRW 6.0074 Trillion and operating profit at KRW 899.3 Billion (OPM 15.0%).
- Package Solution Division (FC-BGA):
- Structural growth momentum driven by expanding market share in AI accelerators.
- GTC 2026 confirmed volume increases and higher technical specs for NVSwitch ASIC substrates under next-gen Vera Rubin architecture, securing long-term demand visibility through 2027 and beyond.
- 2026 Package division revenue forecast at KRW 2.7642 Trillion and operating profit at KRW 332.6 Billion (OPM 12.0%).
- Synchronized Business Upcycle:
- Entering a rare synchronized upcycle across both MLCC and FC-BGA divisions, providing additional earnings upside if actual price hikes exceed initial expectations.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a passive component maker exposed to consumer IT cyclicality, but as a premier AI hardware platform company entering a rare synchronized upcycle where both MLCC and FC-BGA divisions benefit from simultaneous price (P) and volume (Q) growth. Rather than focusing on short-term first-quarter one-off cost impacts, the analytical perspective places greater strategic significance on Murata’s transition toward executing MLCC price increases, alongside multi-year demand visibility through 2027 anchored by NVSwitch substrate spec upgrades for the Vera Rubin AI platform.
To assess whether this investment thesis continues to materialize, key tracking points include Samsung Electro-Mechanics’ realization of MLCC price hikes following Murata’s actions, the production and shipment timeline of NVSwitch ASIC substrates for the Vera Rubin architecture, and the progression of annual operating profit toward the projected KRW 2 Trillion level by 2027. 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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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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