Brokerage : Yuanta Securities
Analyst : Sunyoung Kou
Investment Rating : BUY (Initiation)
Target Price : KRW 180,000 (Initiation)
Core Momentum : Product mix improvement led by AI servers and automotive applications, alongside expanding FC-BGA demand, driving earnings level-up and valuation re-rating potential.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Coverage Initiated), Target Price of KRW 180,000
- Valuation Methodology: Applied a target PBR multiple of 1.5x (the 2025F average PBR of global MLCC peers Murata, Taiyo Yuden, and TDK) to the 12MF BPS of KRW 119,873
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735 Billion / Net Profit (Controlling) KRW 679 Billion
- 2025F: Revenue KRW 11.122 Trillion / Operating Profit KRW 843 Billion / Net Profit (Controlling) KRW 636 Billion
- 2026F: Revenue KRW 11.854 Trillion / Operating Profit KRW 1.066 Trillion / Net Profit (Controlling) KRW 912 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F):
- PER: 15.6x → 18.7x → 13.0x
- PBR: 1.2x → 1.3x → 1.3x
- EV/EBITDA: 6.7x → 6.7x → 6.1x
- ROE: 8.2% → 7.1% → 10.1%
- 3Q25 Quarterly Earnings Forecast: Revenue of KRW 2.849 Trillion (YoY +9.7%, QoQ +2.3%), Operating Profit of KRW 248 Billion (YoY +7.0%, QoQ +16.4%, OPM 8.7%)
🚀 2. [Market Opportunities & Business Outlook]
- Component (MLCC) Mix Improvement & Higher Utilization Rates:
- Structural expansion in revenue contribution from AI servers, networking, and automotive applications. Server share within applications has surpassed 40%, overtaking traditional PC-centric demand.
- Inventory turnover days have contracted below 4 weeks compared to the normalized 4–6 weeks due to rising shipment volumes.
- Component division utilization rates are expected to increase from 85% in 1Q25 and 90% in 2Q25 to approximately 95% in 2H25, supporting steady top-line growth and margin defense.
- Expansion into High-Value FC-BGA Substrates:
- Commenced shipments of AI accelerator substrates to North American Cloud Service Providers (CSPs).
- Robust demand growth for AI accelerator and ASIC-use FC-BGA substrates driven by continuous proprietary ASIC development by North American Big Techs and visible large-scale AI server cluster investments through 2026.
- Tight global supply conditions due to limited qualified suppliers are expected to amplify benefits for participating manufacturers.
- Customer and Application Diversification:
- Collaboration with key North American customers is expanding beyond MLCC into substrates and camera modules, enhancing 2026 earnings visibility.
- Application diversification extending from automotive to servers and humanoid robotics provides solid mid- to long-term growth drivers.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional passive component maker vulnerable to IT set demand cycles, but as an advanced electronic component enterprise undergoing a structural transition toward high-value products in AI servers and automotive applications. Greater weight is placed on qualitative shifts in product mix and substrate supply dynamics rather than traditional cyclical set demand.
To verify whether this investment thesis materializes going forward, investors should monitor whether the component division achieves and sustains the projected 95% utilization rate in 2H25 alongside disciplined inventory levels, whether FC-BGA shipments for AI accelerators and ASICs translate into substantial profitability gains in the package division, and whether diversification into substrates and camera modules for key North American accounts develops as projected. These developments can be tracked through upcoming quarterly earnings releases, official IR materials, and regulatory filings.
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