Brokerage : Shinhan Securities
Analyst : Kangho Oh, Jibeom Seo
Investment Rating : BUY (Maintained)
Target Price : KRW 190,000 (Maintained)
Core Momentum : Resilient earnings stability and valuation re-rating potential supported by an expanding revenue share in high-value industrial/automotive MLCCs and server FC-BGA substrates amidst IT set demand headwinds.
📊 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 118,960
- Valuation Status: Trading at a 2025F P/B of 1.1x, below the historical low average of 1.2x
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735.0 Billion / Net Profit (Controlling) KRW 679.1 Billion
- 2025F: Revenue KRW 10.830 Trillion / Operating Profit KRW 824.8 Billion / Net Profit (Controlling) KRW 616.8 Billion
- 2026F: Revenue KRW 11.751 Trillion / Operating Profit KRW 980.5 Billion / Net Profit (Controlling) KRW 733.1 Billion
- 2027F: Revenue KRW 12.856 Trillion / Operating Profit KRW 1.129 Trillion / Net Profit (Controlling) KRW 848.0 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F → 2027F):
- PER: 14.3x → 17.1x → 14.4x → 12.4x
- PBR: 1.1x → 1.1x → 1.1x → 1.0x
- EV/EBITDA: 5.9x → 4.7x → 4.2x → 3.8x
- ROE: 8.2% → 6.8% → 7.7% → 8.4%
- Dividend Yield (DY): 1.5% → 1.6% → 1.9% → 1.9%
- 2Q25 Quarterly Earnings Forecast (Preview):
- Total Company: Revenue KRW 2.711 Trillion (YoY +5%), Operating Profit KRW 206.8 Billion (YoY -1%, OPM 7.6%). Operating profit was revised down by 5% due to FX shifts (KRW/USD 1,453 in 1Q25 → 1,401 in 2Q25).
- Division Revenue: Component KRW 1.288 Trillion (YoY +11%), Package Substrate KRW 540.6 Billion (YoY +8%), Module (Optics) KRW 882.3 Billion (YoY -4%).
🚀 2. [Market Opportunities & Business Outlook]
- High-Value MLCC Mix Expansion:
- Despite tariff concerns and broader IT set uncertainty, favorable demand for high-value components limits shipment (Q) contraction, while pricing (P) remains resilient.
- 2025F annual Component division revenue is projected to reach KRW 4.974 Trillion (YoY +12%).
- MLCC revenue share for industrial applications is forecast to expand to ~20% (vs. 18% in 2024), and automotive MLCC share is estimated to rise to 29% (vs. 25% in 2024).
- Package Substrate (FC-BGA) Share Increase:
- Driven by higher shipments for server and network applications, high-value FC-BGA revenue share within the package substrate division is projected to reach 51% (+4%p) in 2025.
- Package division annual revenue is forecast at KRW 2.272 Trillion in 2025F and KRW 2.694 Trillion in 2026F.
- Portfolio Transformation Catalyst:
- 2025 marks a structural turning point for client and product diversification, benefiting from AI market expansion, rising interest in custom ASICs, and improving automotive profitability.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a cyclical component maker vulnerable to consumer IT set softness and FX swings, but as a top-tier tech leader establishing solid fundamental earnings power through high-value portfolio transformation. Greater significance is attached to the structural expansion of industrial/automotive MLCCs and rising high-value FC-BGA substrate mix in server and ASIC applications rather than near-term end-market fluctuations.
To verify whether this investment thesis materializes going forward, investors should monitor whether the industrial (~20%) and automotive (29%) revenue targets in MLCC are achieved in 2025, whether FC-BGA revenue share reaches 51% within the substrate division to drive margin expansion, and whether new client acquisition and new product launches successfully diversify the company’s AI and automotive portfolio. These developments can be tracked through upcoming quarterly earnings releases, official IR materials, 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.
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