Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 250,000 (Raised)
Core Momentum : Multi-year earnings expansion and target price upgrade driven by structural AI cycle tailwinds pushing FC-BGA utilization above 80%, alongside tight MLCC supply-demand dynamics reaching 100% capacity utilization despite planned expansions.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised by +11% from KRW 225,000 to KRW 250,000 (27.7% upside potential), reflecting upward revisions in 2026 divisional operating profits (Component +5%, Substrate +1%, Optics +15%) and peer Target EV/EBITDA multiple re-ratings (Component: 7.4x → 9.4x, Substrate: 8.9x → 9.6x).
- Base Share Price (As of Oct 2, 2025): KRW 195,800 (Market Cap: KRW 14.63 Trillion, KOSPI: 3,549.21 pt, Shares Outstanding: 75.00M, Free Float: 73.5%, Foreign Ownership: 37.5%, Beta: 1.04).
- Valuation Multiples & Trend:
- PER: 2024: 14.1x → 2025(E): 23.1x → 2026(E): 14.7x → 2027(E): 12.3x
- PBR: 2024: 1.1x → 2025(E): 1.8x → 2026(E): 1.6x → 2027(E): 1.5x
- ROE: 2024: 8.2% → 2025(E): 7.3% → 2026(E): 10.8% → 2027(E): 11.7%
- Dividend Yield: 2024: 1.5% → 2025(E): 0.9% → 2026(E): 0.9% → 2027(E): 0.9%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.15 Trillion, Operating Profit KRW 834.0 Billion (OPM 7.5%, in line with consensus of KRW 838.0 Billion), Net Profit KRW 657.0 Billion, EPS KRW 8,473.
- 2026(E): Revenue KRW 12.37 Trillion, Operating Profit KRW 1.12 Trillion (OPM 9.1%), Net Profit KRW 1.03 Trillion, EPS KRW 13,324.
- 2027(E): Revenue KRW 13.85 Trillion, Operating Profit KRW 1.38 Trillion (OPM 10.0%), Net Profit KRW 1.24 Trillion, EPS KRW 15,920.
- 3Q25 Preview:
- Projected Revenue of KRW 2.87 Trillion (+10.6% YoY, +1.6% vs. consensus) and Operating Profit of KRW 257.7 Billion (+11.1% YoY, +5.3% vs. consensus), beating market expectations on favorable FX, solid non-A FC-BGA demand, and strong foldable smartphone camera module sales.
🚀 2. [Market Opportunities & Business Outlook]
- FC-BGA (Structural AI Beneficiary & Utilization Level-Up Above 80%):
- Sustained growth driven by AI6 substrate supplies to Customer T and broad customer AI platform transitions, including Customer A.
- Current FC-BGA utilization estimated around 60%, but projected to level up to over 80% in 2026.
- High potential for client base diversification beyond major accounts, accelerating high-value product mix improvements and elevating structural profitability.
- MLCC & Substrates (Expansion Pressures & Tight Supply Environment):
- 2026 MLCC capacity utilization is expected to reach 100% despite an annual capacity expansion of 10–15%.
- High-performance AI computing increases per-system MLCC content and expands substrate area and layer counts, cannibalizing effective industry production capacity.
- Simultaneous price (P) and volume (Q) growth cycle established, providing structural medium-term upside.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a prime beneficiary of industry-wide effective capacity cannibalization, where advanced AI requirements drive higher per-system MLCC counts as well as larger, higher-layer package substrates. The core perspective highlights that despite annual capacity additions of 10–15%, MLCC utilization reaching 100% and FC-BGA utilization leveling up to over 80% in 2026 will establish a dual price (P) and volume (Q) growth upcycle, justifying upward revisions to earnings estimates and target multiples.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q3 2025 Operating Profit in the KRW 250.0 Billion range (projected at KRW 257.7 Billion) to confirm consensus beat; 2) lifting FC-BGA capacity utilization above 80% in 2026 supported by customer AI platform migrations; and 3) reaching 100% MLCC capacity utilization under the 10–15% annual capacity expansion plan, supporting 2026 corporate Operating Profit of KRW 1.12 Trillion. These developments can be monitored through upcoming quarterly earnings releases, 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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