Brokerage : Shinhan Securities
Analyst : Kangho Oh, Jibeom Seo
Investment Rating : BUY (Maintained)
Target Price : KRW 190,000 (Maintained)
Core Momentum : Demonstrating resilient fundamental earnings power and entering a valuation re-rating phase driven by expanding revenue share from high-value industrial/automotive MLCCs and server FC-BGA substrates.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained), Target Price maintained at KRW 190,000
- Valuation Methodology: Applied a target PBR multiple of 1.6x (5-year historical average from 2020 to 2024) to the 2025F BPS of KRW 118,264
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735 Billion / Net Profit (Controlling) KRW 679.1 Billion
- 2025F: Revenue KRW 10.941 Trillion / Operating Profit KRW 799.7 Billion / Net Profit (Controlling) KRW 559.5 Billion
- 2026F: Revenue KRW 11.859 Trillion / Operating Profit KRW 968.5 Billion / Net Profit (Controlling) KRW 748.5 Billion
- 2027F: Revenue KRW 12.963 Trillion / Operating Profit KRW 1.117 Trillion / Net Profit (Controlling) KRW 863.5 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F → 2027F):
- PER: 14.3x → 20.9x → 15.6x → 13.5x
- PBR: 1.1x → 1.3x → 1.2x → 1.1x
- EV/EBITDA: 5.9x → 5.3x → 4.7x → 4.2x
- ROE: 8.2% → 6.2% → 7.9% → 8.6%
- Dividend Yield (DY): 1.5% → 1.4% → 1.7% → 1.7%
- Quarterly Performance & Outlook:
- 2Q25 Review: Revenue KRW 2.785 Trillion (YoY +8%), Operating Profit KRW 213.0 Billion (YoY +1%, OPM 7.6%). Both revenue and operating profit exceeded initial brokerage forecasts by 3%, confirming solid operational resilience.
- 3Q25 Preview: Projected Revenue of KRW 2.816 Trillion, Operating Profit of KRW 231.3 Billion (OPM 8.2%).
🚀 2. [Market Opportunities & Business Outlook]
- Simultaneous Expansion in Pricing (P) and Volume (Q):
- Volume (Q) decline in 2Q25 was minimal, while pricing (P) saw slight YoY and QoQ increases supported by high-value product sales despite FX headwinds.
- MLCC revenue share for industrial applications is projected to rise to ~20% in 2025 (vs. 18% in 2024), while the automotive share is estimated to reach ~29% (vs. 25% in 2024).
- Segment Growth Catalysts & Revenue Projections:
- Component (MLCC): Solid growth centered on server and network demand alongside expanding automotive shipments. 2025F revenue projected at KRW 5.072 Trillion, 2026F at KRW 5.472 Trillion.
- Package Substrates: Expanding demand for server FC-BGA and 3D substrates. Due to increased server/network shipments, FC-BGA revenue share within the package division is forecast to rise to 51% (+4%p). 2025F revenue projected at KRW 2.225 Trillion, 2026F at KRW 2.628 Trillion.
- Optics & Communication (Module): Mass production expansion of flagship products for global overseas clients. 2025F revenue projected at KRW 3.645 Trillion, 2026F at KRW 3.759 Trillion.
- Customer and Portfolio Diversification:
- 2025 marks a pivotal year for product and client diversification across new accounts and product launches.
- Growth across package substrates and automotive components underpins expectations for an upcoming valuation re-rating.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a cyclical set component vendor vulnerable to broader IT sector slowdowns and FX pressures, but as an advanced hardware leader demonstrating structural earnings resilience through high-value product mix optimization and portfolio diversification. Greater significance is attached to the qualitative expansion in industrial/automotive MLCCs and server-use FC-BGA substrates rather than broad consumer electronics demand cycles.
To verify whether this investment thesis materializes going forward, investors should monitor whether the industrial (~20%) and automotive (~29%) shares of MLCC sales hit target levels in 2025, whether FC-BGA revenue share successfully expands to 51% within the substrate division to drive margin gains, and whether client diversification efforts—including shipments to overseas flagship smartphone accounts—progress as planned. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
