Brokerage : iM Securities
Analyst : Eui-young Ko
Investment Rating : Buy (Maintained)
Target Price : KRW 280,000 (Raised, 12-month Target Price)
Core Momentum : Continued valuation multiple re-rating and earnings growth supported by structural high capacity utilization in MLCCs, disciplined industry CAPEX, 2026 operating profit reaching KRW 1.28 Trillion (+45.0% YoY), and a 21% upgrade to the target P/B multiple.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy maintained, 12-month Target Price raised from KRW 220,000 to KRW 280,000 (20.7% upside potential), derived by applying a target P/B multiple of 2.1x (raised by ~21% from the previous multiple, corresponding to 10-year historical average P/B + 2SD) to the BPS forecast.
- Base Share Price (As of Oct 29, 2025): KRW 232,000 (Market Cap: KRW 17.33 Trillion, Shares Outstanding: 74.69M, 60-Day Avg Turnover: KRW 9.99 Billion, Foreign Ownership: 38.6%).
- Valuation Multiples & Trend:
- PER: 2024: 14.1x → 2025(E): 28.0x → 2026(E): 18.3x → 2027(E): 15.5x
- PBR: 2024: 1.1x → 2025(E): 1.9x → 2026(E): 1.7x → 2027(E): 1.6x
- BPS: 2024: KRW 113,261 → 2025(E): KRW 121,089 → 2026(E): KRW 133,272 → 2027(E): KRW 147,049
- ROE: 2024: 8.2% → 2025(E): 7.1% → 2026(E): 10.0% → 2027(E): 10.7%
- EV/EBITDA: 2024: 5.7x → 2025(E): 9.7x → 2026(E): 7.6x → 2027(E): 6.1x
- Dividend Yield: 2024: 1.5% → 2025(E): 1.1% → 2026(E): 1.2% → 2027(E): 1.5%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.20 Trillion (+8.8% YoY), Operating Profit KRW 886.7 Billion (+20.6% YoY, OPM 7.9%), Net Profit KRW 634.0 Billion, EPS KRW 8,293.
- 2026(E): Revenue KRW 12.30 Trillion (+9.8% YoY), Operating Profit KRW 1.29 Trillion (~KRW 1.28 Trillion, +45.0% YoY, OPM 10.5%), Net Profit KRW 965.0 Billion, EPS KRW 12,623.
- 2027(E): Revenue KRW 13.03 Trillion, Operating Profit KRW 1.47 Trillion (OPM 11.0%), Net Profit KRW 1.10 Trillion, EPS KRW 14,978.
- 3Q25 Results & 4Q25 Preview:
- 3Q25 Results: Revenue of KRW 2.89 Trillion and Operating Profit of KRW 260.3 Billion (OPM 9.0%), beating consensus operating profit by +5%, driven by favorable FX and strong server/automotive demand across all units.
- 4Q25 Outlook: Projected Revenue of KRW 2.78 Trillion and Operating Profit of KRW 212.8 Billion (OPM 7.6%), beating consensus operating profit by +18%. MLCC capacity utilization expected to remain above 90% despite typical off-season timing (vs. 77% in 4Q24).
🚀 2. [Market Opportunities & Business Outlook]
- MLCC Cycle Sustainability (High Utilization & Disciplined CAPEX):
- 3Q25 MLCC capacity utilization reached the upper-90% range, surpassing initial guidance (mid-90%), with top-tier competitors also estimated above 90%.
- Favorable product mix shift driven by server/automotive applications (~20% OPM segment) alongside easing price decline pressures in legacy IT segments.
- Unlike past cycles, major suppliers (Samsung Electro-Mechanics targeting +10–15% volume expansion, Murata, Taiyo Yuden) maintain conservative and disciplined CAPEX plans.
- Limited expansion from Chinese suppliers and reduced near-term IT set tariff risks keep new market entrant risks low.
- Package Substrate (FC-BGA) Upside:
- Supply-demand conditions for AI server ABF substrates projected to tighten further into H2 2026.
- Server-oriented FC-BGA revenue forecast: KRW 908.0 Billion in 2024 → KRW 1.1 Trillion in 2025 → KRW 1.3 Trillion in 2026.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a company securing prolonged MLCC cycle sustainability through high-margin server/automotive product mix transitions and disciplined industry-wide CAPEX behavior, rather than being constrained by legacy IT consumer demand. The core perspective highlights that operating in the upper-90% utilization range under tight industry supply supports 2026 Operating Profit reaching KRW 1.28 Trillion (+45.0% YoY), while raising the target P/B multiple by approximately 21% to 2.1x (historical 10-year average P/B + 2SD).
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) sustaining MLCC capacity utilization above 90% in Q4 2025 and achieving operating profit in the KRW 210.0 Billion range to confirm off-season strength; 2) ongoing product mix improvements in high-margin server/automotive MLCCs alongside continued CAPEX discipline across Japanese peers; and 3) server-oriented FC-BGA revenue reaching KRW 1.3 Trillion in 2026, supporting corporate operating profit of KRW 1.28 Trillion. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
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