Brokerage : Yuanta Securities
Analyst : Sun-young Ko
Investment Rating : BUY (Maintained)
Target Price : KRW 330,000 (Maintained)
Core Momentum : Multi-year growth visibility and weakening seasonality driven by structural server/automotive demand pivot, North American Big Tech expansion, and accelerated full capacity timeline in FC-BGA
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; Target Price maintained at KRW 330,000 (Upside: 21% vs. current price of KRW 272,000).
- Valuation Methodology: Applied a Target P/B multiple of 2.3x (2020–2021 historical average) to 2026F BPS of KRW 142,806.
- 4Q25 Earnings Review:
- Revenue: KRW 2.9021 Trillion (KRW 2.902 Trillion in table; +16.4% YoY, +0.5% QoQ, +2.2% vs. consensus of KRW 2.840 Trillion).
- Operating Profit: KRW 239.5 Billion (KRW 240.0 Billion in table; +108.2% YoY, -8.0% QoQ, OPM 8.3%, beating consensus of KRW 229.0 Billion by 4.8%).
- Controlling Net Profit: KRW 194.0 Billion (-7.1% YoY, -11.9% QoQ).
- Annual Financial Projections (2025P – 2026F):
- 2025P: Revenue KRW 11.314 Trillion / Operating Profit KRW 913.0 Billion / Controlling Net Profit KRW 677.0 Billion
- 2026F: Revenue KRW 12.591 Trillion / Operating Profit KRW 1.282 Trillion / Controlling Net Profit KRW 1.026 Trillion
- Key Financial Indicators (2026F):
- P/E: 19.9x / P/B: 1.9x
- ROE: 10.0% / EV/EBITDA: 8.8x
- Dividend Yield: 1.45%
🚀 2. [Market Opportunities & Business Outlook]
- Structural Pivot to Server Demand & Weakening Seasonality:
- Expanding server revenue mix is structurally weakening quarterly earnings seasonality, supporting 4Q results to beat consensus despite typical off-peak quarters.
- Expanding server impact is projected to become increasingly visible across both Component and Package divisions throughout 2026.
- Component Division (MLCC):
- Sustained growth across all applications, keeping utilization in the low-90% range with tight inventory of 4–5 weeks.
- Automotive and industrial applications approaching 50% of total MLCC mix, reducing vulnerability to consumer mobile cycles.
- Oligopoly structure with Murata highlights strategic positioning in server-grade MLCCs.
- Package Solution Division (FC-BGA & BGA):
- Server and network FC-BGA growth more than offset seasonal mobile AP BGA destocking.
- Server/network applications already account for ~50% of total FC-BGA revenue.
- The timeline to reach full FC-BGA capacity utilization has accelerated from 2027 to 2H26; 2026 CapEx is expected to expand to KRW 1.4–1.5 Trillion (vs. KRW 1.2 Trillion in 2025).
- Customer base is expanding with 4 new clients added to the existing 2 client accounts.
- Optics & New Initiatives:
- Pursuing FP coil supply for North American Client A’s smartphone camera actuators.
- Mid-to-long term visibility emerging in glass substrates and humanoid robotics initiatives.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a cyclical parts supplier bound by consumer IT off-seasons, but as a critical AI hardware platform partner successfully rebalancing its revenue mix toward server and automotive applications to neutralize historical seasonality. Rather than focusing on temporary mobile AP substrate destocking, the analytical thesis places greater strategic significance on the oligopolistic positioning in server MLCCs, the pull-forward of full FC-BGA capacity utilization to 2H26 alongside 4 new customer additions, and the supporting CapEx ramp-up to KRW 1.4–1.5 Trillion.
To assess whether this investment thesis continues to materialize, key tracking points include FC-BGA lines reaching full capacity in 2H26, commercial volume ramp-up across the 4 newly secured FC-BGA customer accounts, and the extent to which structural mix enrichment toward server/automotive applications drives the achievement of projected 2026 annual operating profit (KRW 1.28 Trillion). 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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