Brokerage : Meritz Securities
Analyst : Seung-soo Yang, Seo-hyun Woo (RA)
Investment Rating : Buy (Maintained)
Target Price : KRW 310,000 (Raised, 12-month Target Price)
Core Momentum : Continued earnings estimate upgrades and valuation re-rating driven by structural excess demand for AI server MLCCs and persistent supply shortages in large-area AI ABF substrates.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy maintained, 12-month Target Price raised to KRW 310,000, reflecting upward revisions in 2026 earnings estimates and target multiple adjustments.
- Base Share Price (As of Dec 5, 2025): KRW 263,000 (Upside potential: 17.9%, Market Cap: KRW 19.64 Trillion)
- Valuation Multiples & Trend:
- P/E: 2024: 13.7x → 2025(E): 28.7x → 2026(E): 19.3x → 2027(E): 16.3x
- P/B: 2024: 1.1x → 2025(E): 2.2x → 2026(E): 2.0x → 2027(E): 1.8x
- EV/EBITDA: 2024: 5.9x → 2025(E): 10.5x → 2026(E): 7.9x → 2027(E): 6.7x
- BPS: 2024: KRW 113,261 → 2025(E): KRW 120,383 → 2026(E): KRW 131,844 → 2027(E): KRW 145,704
- ROE: 2024: 8.2% → 2025(E): 7.6% → 2026(E): 10.5% → 2027(E): 11.3%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.28 Trillion (+0.3% vs. prev.), Operating Profit KRW 902.0 Billion (+2.3% vs. prev., OPM 8.0%), Net Profit (Controlling) KRW 686.8 Billion (+2.5% vs. prev.), EPS KRW 9,151.
- 2026(E): Revenue KRW 12.53 Trillion (+1.8% vs. prev.), Operating Profit KRW 1.28 Trillion (+8.4% vs. prev., OPM 10.2%), Net Profit (Controlling) KRW 1.03 Trillion (+8.7% vs. prev.), EPS KRW 13,659.
- 2027(E): Revenue KRW 13.37 Trillion, Operating Profit KRW 1.47 Trillion (OPM 11.0%), Net Profit (Controlling) KRW 1.21 Trillion, EPS KRW 16,152.
- 4Q25 Preview:
- Projected Revenue of KRW 2.86 Trillion (+14.9% YoY, +1.0% vs. consensus) and Operating Profit of KRW 228.2 Billion (+98.4% YoY, +2.8% vs. consensus, OPM 8.0%).
- MLCC ASP projected at +1.0% QoQ, shipments at -4.5%, capacity utilization at 91%, and inventory days maintained around 30 days.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (AI Server MLCC Demand & Utilization):
- 2026 Component division revenue and operating profit forecasts revised up by 2.3% and 10.6%, respectively.
- High entry barriers due to ultra-small, high-capacitance requirements in AI server MLCCs, maintaining an oligopolistic market dominated by Murata and Samsung Electro-Mechanics.
- MLCC content per AI server baseboard revised up from 10,000–15,000 units to 15,000–20,000 units (~30% CAGR for AI server MLCC demand).
- High capacity utilization (>90%) expected to persist driven by AI servers and automotive demand, offsetting IT MLCC market competition concerns.
- Package Solution Division (ABF Substrate Profitability & Customer Expansion):
- Package Solution division projected to recover a double-digit operating margin in 2026 after three years, driven by ABF substrate growth.
- Supply tightness worsening due to larger package sizes and higher layer counts in AI ABF substrates, combined with price increase pressure from T-Glass raw material shortages.
- Expansion of AI ABF supply pipeline anticipated, building on first-vendor status for North American CSP ‘A’, with new deliveries for North American ‘M’ ASIC and North American GPU switch substrates.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a company undergoing an accelerated positioning transition from a consumer IT set beneficiary to a core AI infrastructure beneficiary. The perspective emphasizes that the structural excess demand for high-capacitance AI server MLCCs and intensifying supply tightness in large-area AI ABF substrates outweigh competition concerns in legacy IT components, driving earnings estimate upgrades and gradual valuation multiple expansion.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) sustaining MLCC capacity utilization in the 90% range along with quarter-over-quarter ASP stability driven by AI server/automotive demand; 2) the Package Solution division’s actual recovery to a double-digit operating profit margin in 2026; and 3) the commercial delivery and revenue recognition of new AI ABF substrates for North American client ‘M’ (ASIC) and the North American GPU maker (switch substrates). These developments can be monitored through future quarterly earnings announcements, official IR materials, regulatory filings, and corporate 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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