Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 360,000 (Raised)
Core Momentum : Synchronized valuation re-rating and structural margin expansion projected on the back of IT set makers shifting toward annual MLCC Long-Term Agreements (LTAs) and FC-BGA entering a seller’s market driven by expanding AI server and automotive demand
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; Target Price raised by 13% to KRW 360,000 (from KRW 320,000; Upside: 23.3% vs. current price of KRW 292,000).
- Valuation Revision Rationale:
- Raised Component division target EV/EBITDA multiple to 12.6x (from 10.0x), matching Murata’s multiple.
- Reflected peer valuation re-rating in FC-BGA substrates (multiple raised from 11.0x to 13.5x).
- Reflected direct supply chain beneficiary status as leading AI server makers reinforce market dominance.
- Annual Financial Projections (2025F – 2027F):
- 2025F: Revenue KRW 11.243 Trillion / Operating Profit KRW 904.0 Billion (OPM 8.0%) / Net Profit KRW 662.0 Billion
- 2026F: Revenue KRW 12.513 Trillion / Operating Profit KRW 1.283 Trillion (OPM 10.3%) / Net Profit KRW 1.039 Trillion
- 2027F: Revenue KRW 13.994 Trillion / Operating Profit KRW 1.603 Trillion (OPM 11.5%) / Net Profit KRW 1.285 Trillion
- Key Financial Indicators (2026F):
- EPS: KRW 13,384 (KRW 16,554 in 2027F)
- P/E: 21.8x / P/B: 2.4x
- ROE: 10.6% (11.9% in 2027F)
- Dividend Yield: 0.6%
🚀 2. [Market Opportunities & Business Outlook]
- MLCC Long-Term Agreement (LTA) Signal (Low Inventory + High Utilization = Upward Pricing Momentum):
- MLCC contract negotiations with IT set makers are transitioning from quarterly to annual structures, indicating a structural shift from spot-driven pricing toward annual contract structures.
- Drivers: ① Preemptive client procurement to secure supply amid thin inventory buffers, and ② efforts to manage prospective price hike risks via annual agreements under high vendor capacity utilization.
- Strategic Implications: Functions as a leading indicator of tightening supply and impending price increases; improves supplier volume visibility and fortifies pricing defense/power. Amid rising high-end AI/automotive MLCC prices, annual IT contracts will support structural margin expansion across the entire MLCC division.
- Package Substrate Division (Seller’s Market & Structural Upcycle):
- Expanding AI server demand combined with automotive (ADAS) adoption is diversifying customer bases and cementing a seller’s market.
- Despite raw material cost pressures from T-Glass shortages, AI ASIC proliferation is accelerating larger-area and higher-layer architectures, translating upstream costs into ASP increases via yield-guaranteed contracts.
- Pricing power is projected to hold firm as alternative suppliers for high-spec packaging substrates remain strictly limited.
- Structural upcycle is expected to continue following the path of “tight raw materials → higher technical specs → ASP expansion”.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional cyclical passive component maker exposed to consumer IT demand fluctuations, but as a critical AI hardware provider commanding multiple expansion on par with global peers, anchored by client shifts toward annual MLCC contracts and a structural seller’s market in FC-BGA. Rather than focusing on short-term shipment variations, the analytical thesis places greater strategic significance on set makers proactively requesting annual LTAs amid tight MLCC capacity, and the FC-BGA division’s ability to pass on upstream T-Glass cost pressures into higher ASPs via high-layer AI ASIC designs and yield-guaranteed contract structures.
To assess whether this investment thesis continues to materialize, key tracking points include the expansion of annual LTA contract execution with IT set makers, the degree of ASP gains achieved in large-area AI ASIC FC-BGA lines amid T-Glass supply tightness, and the progression toward achieving projected annual operating profits of KRW 1.28 Trillion in 2026 and KRW 1.60 Trillion in 2027. 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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