Brokerage : iM Securities
Analyst : Euiyoung Ko
Investment Rating : Buy (Maintained)
Target Price : KRW 180,000 (Maintained)
Core Momentum : Structural earnings transformation driven by expanding mix of high-margin industrial and automotive components, coupled with anticipated FC-BGA operating leverage from expanding AI infrastructure demand by 2026.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Buy (Maintained), 12-Month Target Price of KRW 180,000 maintained
- Valuation Methodology: Applied a 10-year historical average P/B multiple of 1.4x to the 12MF BPS of KRW 127,009
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735 Billion / Net Profit KRW 679 Billion
- 2025F: Revenue KRW 10.990 Trillion / Operating Profit KRW 798 Billion (YoY +9%, adjusted -3% from previous estimate) / Net Profit KRW 593 Billion
- 2026F: Revenue KRW 11.710 Trillion / Operating Profit KRW 1.023 Trillion (YoY +28%) / Net Profit KRW 807 Billion
- 2027F: Revenue KRW 12.412 Trillion / Operating Profit KRW 1.203 Trillion / Net Profit KRW 976 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F → 2027F):
- PER: 14.1x → 19.5x → 14.3x → 11.8x
- PBR: 1.1x → 1.2x → 1.1x → 1.0x
- EV/EBITDA: 5.7x → 5.7x → 4.8x → 4.0x
- ROE: 8.2% → 6.5% → 8.2% → 9.2%
- EPS: KRW 8,752 → KRW 7,640 → KRW 10,405 → KRW 12,581
- Quarterly Performance & Outlook:
- 2Q25 Review: Revenue KRW 2.78 Trillion, Operating Profit KRW 213 Billion. Exceeded consensus by +2% in Revenue and +3% in Operating Profit despite FX headwinds.
- 3Q25 Preview: Projected Revenue of KRW 2.84 Trillion, Operating Profit of KRW 239.6 Billion (revised down by 3% reflecting moderate package substrate margin recovery pace).
🚀 2. [Market Opportunities & Business Outlook]
- Strategic Core Transition (Smartphone/PC → AI/Automotive):
- Industrial (server, etc.) and automotive segments already surpass IT consumer sets in terms of operating profit contribution.
- Industrial and automotive applications yield 2–3 times higher operating margins compared to smartphone and PC applications.
- MLCC revenue share from industrial/automotive: Projected to expand from 47% in 2025 to 50% in 2026 and 53% in 2027, surpassing the consumer IT share starting in 2026.
- FC-BGA substrate revenue from servers is also expected to overtake PC substrate revenue beginning in 2025.
- Component (MLCC) High Utilization Rates:
- 2Q25 MLCC capacity utilization reached 90%, supported by robust AI server demand and strong Tier-1 automotive customer volume offsetting broader market volatility.
- 3Q25 MLCC utilization is anticipated to further improve to around 95%.
- Package Substrate (PKG) Medium-Term Leverage:
- While 2Q25 operating leverage was muted by soft PC margins and initial capacity absorption in Vietnam, AI accelerator substrate shipments are expanding.
- Industry-wide substrate supply for AI applications is tightening, and securing additional Cloud Service Provider (CSP) customers in 2026 is expected to accelerate capacity utilization and returns on the Vietnam investment.
- Key Global Automotive/Tech Account Synergy:
- Company-wide supplies across camera modules, MLCCs, and FC-BGA continue, with sales to this key customer estimated at 6–7% of total revenue.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a component vendor vulnerable to consumer IT set cycles, but as an advanced technology provider shifting its structural profit core toward high-margin AI infrastructure and automotive electronics. Greater emphasis is placed on the qualitative expansion of the industrial/automotive mix—which commands 2–3x higher profitability—and the anticipated operating leverage of FC-BGA substrates rather than cyclical smartphone demand trends.
To verify whether this investment thesis materializes going forward, investors should monitor whether MLCC capacity utilization achieves the 95% mark in 3Q25, whether the industrial/automotive share of MLCC sales crosses the 50% threshold in 2026 as projected, and whether the package substrate division secures additional global CSP accounts to unlock meaningful operating leverage from its Vietnam facility. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory disclosures.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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