Brokerage : Shinhan Securities
Analyst : Kang-ho Oh, Ji-beom Seo
Investment Rating : BUY (Maintained)
Target Price : KRW 310,000 (Raised)
Core Momentum : High-value product mix expansion in Component and Package Solution divisions, projected MLCC capacity utilization exceeding 90%, and prolonged structural benefits from AI adoption supporting a target price upgrade to KRW 310,000.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised by 41% to KRW 310,000 (33.6% upside potential), derived by applying a target P/B multiple of 2.4x (historical average high P/B during the 2020–2021 earnings expansion) to the 2026 BPS forecast of KRW 127,918.
- Base Share Price (As of Oct 29, 2025): KRW 232,000 (Market Cap: KRW 17.33 Trillion, Shares Outstanding: 74.70M, Free Float: 73.5%, Daily Avg Turnover: KRW 99.89 Billion, Foreign Ownership: 38.6%).
- Valuation Multiples & Trend:
- PER: 2023: 28.3x → 2024: 14.3x → 2025(E): 27.8x → 2026(E): 21.0x → 2027(E): 17.2x
- PBR: 2023: 1.5x → 2024: 1.1x → 2025(E): 1.9x → 2026(E): 1.8x → 2027(E): 1.7x
- EV/EBITDA: 2023: 7.6x → 2024: 5.9x → 2025(E): 8.0x → 2026(E): 7.0x → 2027(E): 6.1x
- ROE: 2023: 5.5% → 2024: 8.2% → 2025(E): 7.2% → 2026(E): 9.0% → 2027(E): 10.2%
- Dividend Yield: 2023: 0.8% → 2024: 1.5% → 2025(E): 0.9% → 2026(E): 1.1% → 2027(E): 1.1%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.22 Trillion, Operating Profit KRW 887.3 Billion (OPM 7.9%), Net Profit (Controlling) KRW 654.5 Billion.
- 2026(E): Revenue KRW 12.57 Trillion, Operating Profit KRW 1.10 Trillion (OPM 8.8%), Net Profit (Controlling) KRW 865.6 Billion.
- 2027(E): Revenue KRW 14.21 Trillion, Operating Profit KRW 1.35 Trillion (OPM 9.5%), Net Profit (Controlling) KRW 1.06 Trillion.
- 3Q25 Results & 4Q25 Preview:
- 3Q25 Results: Revenue of KRW 2.89 Trillion (+10% YoY) and Operating Profit of KRW 260.3 Billion (+16% YoY, OPM 9.0%), beating market consensus by 5%. Led by broad-based divisional revenue growth including Component (+15% YoY) and Package (+6% YoY).
- 4Q25 Outlook: Projected Revenue of KRW 2.81 Trillion, Operating Profit of KRW 213.5 Billion (OPM 7.6%), and Net Profit of KRW 171.2 Billion.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (High MLCC Utilization & Industrial Mix Shift):
- Revenue grew 15% YoY driven by global flagship smartphone launches and robust demand across server and networking markets.
- MLCC capacity utilization projected to exceed ~90% in 2025 (up from ~70% in 2023), supported by high-value server demand even without broad consumer IT device surprises.
- Industrial MLCC revenue contribution estimated to surpass ~20% in 2025 (vs. 18% in 2024).
- Package Solution Division (Large-Area & High-Layer Server Substrates):
- Revenue grew 6% YoY on expanded shipments of large-area, high-layer server substrates.
- High-value product mix expansion projected to lift FC-BGA revenue share to 51% (+4%p).
- Cycle Assessment & Long-Term Outlook:
- The ongoing upcycle combines high-value pricing power (P) with prolonged AI-driven demand expansion, expected to sustain growth longer than the prior pandemic-era cycle.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as entering a structural earnings expansion phase driven by server and network mix improvements, rather than relying on a sudden rebound in consumer IT device demand. The core perspective highlights that rising MLCC capacity utilization above 90%, expanding industrial MLCC share (~20%), and commercial ramp-up of high-layer server FC-BGA substrates justify applying the historical peak P/B multiple of 2.4x (2020–2021 average) to 2026 book value.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) maintaining quarterly earnings resilience with Q4 2025 operating profit around KRW 213.5 Billion; 2) confirming MLCC capacity utilization sustained above 90% in 2025 alongside industrial MLCC revenue share exceeding 20%; and 3) sustaining FC-BGA’s revenue share at 51% within the Package division while reaching 2026 annual Operating Profit of KRW 1.10 Trillion. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
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