Brokerage : Daishin Securities
Analyst : Kang-ho Park, Ji-won Lee (RA)
Investment Rating : BUY (Maintained)
Target Price : KRW 260,000 (Raised)
Core Momentum : Multi-year earnings expansion and valuation multiple re-rating driven by expanding Big Tech AI accelerator FC-BGA orders, mix improvements and potential price hikes in industrial/automotive MLCCs, and accelerating commercialization of glass substrates.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, 6-month Target Price raised by 15.6% to KRW 260,000, derived by applying a target P/E multiple of 22.2x (5-year historical peak average) to the 2026 EPS forecast.
- Base Share Price (As of Oct 17, 2025): KRW 207,000 (25.6% upside potential, Market Cap: KRW 15.73 Trillion, KOSPI: 3,748.89 pt, KOSPI Weight: 0.71%, Foreign Ownership: 37.97%).
- Valuation Multiples & Trend:
- PER: 2024: 14.1x → 2025(E): 24.7x → 2026(E): 17.7x → 2027(E): 15.0x
- PBR: 2024: 1.1x → 2025(E): 1.7x → 2026(E): 1.6x → 2027(E): 1.5x
- BPS: 2024: KRW 113,261 → 2025(E): KRW 120,138 → 2026(E): KRW 130,355 → 2027(E): KRW 142,627
- ROE: 2024: 8.2% → 2025(E): 7.2% → 2026(E): 9.3% → 2027(E): 10.1%
- Earnings Forecast Summary (Post-Revision):
- 2025(E): Revenue KRW 11.20 Trillion (+8.8% YoY), Operating Profit KRW 889.0 Billion (+20.9% YoY, OPM 7.9%), Net Profit (Controlling) KRW 650.0 Billion, EPS KRW 8,372 (EPS revised up by +3.0% vs. prev.).
- 2026(E): Revenue KRW 12.11 Trillion (+8.1% YoY), Operating Profit KRW 1.12 Trillion (+26.0% YoY, OPM 9.2%), Net Profit (Controlling) KRW 908.0 Billion, EPS KRW 11,707 (EPS revised up by +11.7% vs. prev., Operating Profit beats consensus by +5.2%).
- 2027(E): Revenue KRW 13.13 Trillion, Operating Profit KRW 1.36 Trillion (+21.4% YoY, OPM 10.4%), Net Profit (Controlling) KRW 1.07 Trillion, EPS KRW 13,757.
- 3Q25 & 4Q25 Preview:
- 3Q25 Outlook: Revenue of KRW 2.87 Trillion and Operating Profit of KRW 260.7 Billion (+12.6% YoY, +22.4% QoQ), beating consensus (KRW 247.0 Billion) by 5.7%.
- 4Q25 Outlook: Projected Revenue of KRW 2.81 Trillion and Operating Profit of KRW 214.2 Billion (+86.2% YoY, -17.8% QoQ), beating consensus (KRW 174.0 Billion) by 18.5%.
🚀 2. [Market Opportunities & Business Outlook]
- Package Solution (FC-BGA AI Accelerator Expansion & >50% Share):
- Shipments of AI accelerator FC-BGA substrates expanded following 2Q25 shipments to Amazon and AMD, with broader growth opportunities driven by rising Big Tech AI accelerator demand.
- Fixed-cost reductions achieved via higher utilization at the Vietnam facility. FC-BGA revenue share within the substrate business is projected to exceed 50% for the first time in 2025, serving as the central earnings driver for 2026.
- Glass Substrate (TGV) Market Commercialization:
- Acceleration of core layer transitions from plastic to glass to accommodate expanding AI accelerator demand from major tech firms (Nvidia, AMD, Broadcom).
- Factoring in commercial timelines (2027) from LPKF (dominant leader in glass panel TGV equipment), Samsung Electro-Mechanics’ mass-production entry is expected to advance, positioning the firm to capture high-margin market share from Japanese PCB competitors.
- Component (MLCC Industrial/Auto Mix Reaching 57% & Pricing Upside):
- Expanding AI data center investments drive high-capacitance MLCC demand, while industry supply remains constrained to Murata and Samsung Electro-Mechanics.
- Industrial and automotive MLCC revenue share: Surpassing 50% for the first time in 2025 (52%) and projected to reach 57% in 2026.
- Capacity utilization is expected to see limited downside (holding around ~90%) during the Q4/Q1 off-seasons, supporting potential price increases for select high-value product lines.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as transitioning from a legacy consumer IT supplier to a core AI hardware component player, entering a record earnings trajectory across 2026–2027 anchored by AI server FC-BGA substrates and high-value MLCCs. The core perspective highlights that expanding AI accelerator FC-BGA supply to major clients and Big Tech, MLCC industrial/automotive mix expansion to 57% with potential pricing power, and early entry into glass substrates justify substantial valuation multiple re-ratings.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q4 2025 Operating Profit in the KRW 210.0 Billion range (projected at KRW 214.2 Billion) to confirm consensus beat; 2) expanded commercial supply of AI accelerator FC-BGA substrates to Big Tech clients while maintaining a substrate revenue share above 50%; and 3) reaching a 57% industrial/automotive MLCC revenue share in 2026 alongside price realization in supply-constrained high-capacitance product lines. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
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