Brokerage : Eugene Investment & Securities
Analyst : Seung-woo Lee, Joo-hyung Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 165,000 (Lowered)
Core Momentum : Driving continuous earnings expansion in 2025 past near-term estimate cuts, underpinned by resilient AI demand, the mass production of AI accelerator FC-BGA substrates, and rising MLCC content per box from AI hardware penetration.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 165,000 (Lowered from KRW 200,000, reflecting earnings forecast revisions—lowering 2024F Operating Profit from KRW 878B to KRW 771B and 2025F Operating Profit from KRW 1,099B to KRW 936B—and applying a target P/B of 1.55x to 2025F BPS)
- Current Share Price (As of Nov 28, 2024): KRW 112,000
- Market Capitalization: KRW 8.37T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024E KRW 10.21T → 2025E KRW 11.08T (Text: KRW 11.0793T / Table: KRW 11.079T, +9% YoY) → 2026E KRW 12.00T
- Operating Profit: 2023A KRW 639.0B → 2024E KRW 771.0B (Revised down from KRW 878.0B) → 2025E KRW 935.7B (Table: KRW 936.0B, revised down from KRW 1.099T, +20% YoY) → 2026E KRW 1.10T
- Net Profit: 2023A KRW 423.0B → 2024E KRW 576.0B → 2025E KRW 674.0B → 2026E KRW 800.0B
- EPS: 2023A KRW 5,663 → 2024E KRW 7,711 (+36.2% YoY) → 2025E KRW 9,029 (+17.1% YoY) → 2026E KRW 10,711 (+18.6% YoY)
- PER: 2023A 27.1x → 2024E 14.5x → 2025E 12.4x → 2026E 10.4x
- PBR: 2023A 1.5x → 2024E 1.1x → 2025E 1.1x → 2026E 1.0x
- ROE: 2023A 5.5% → 2024E 7.4% → 2025E 8.5% → 2026E 9.3%
- Dividend Yield (2024F): 1.0%
- 3Q24 Earnings Review: Revenue of KRW 2.62T (+11% YoY), Operating Profit of KRW 224.9B (+20% YoY). Component division revenue rose +3% QoQ driven by industrial and automotive growth, Package Solution division grew +12% QoQ on BGA and FC-BGA expansion, while Optics Solution fell -6% QoQ due to lower Chinese client shipments.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC): Solid demand for high-value industrial and automotive MLCCs counters mild set-demand adjustments through 1H25. The division is poised to benefit from increased MLCC content per box driven by rising AI hardware penetration (such as AI phones) and B2B PC replacement demand ahead of the Windows 10 end-of-support.
- Package Solution Division: Structural market growth continues for FC-BGA centered on server CPUs, AI accelerators, and GPUs. Full-scale mass production of AI accelerator FC-BGA in 2025 and higher server CPU substrate revenue are expected to drive division growth.
- 2025 Earnings Outlook: Full-year 2025 Revenue is projected at KRW 11.08T (+9% YoY) with Operating Profit reaching KRW 935.7B (+20% YoY), supported by structural high-end mix expansion.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics through the lens of a necessary target price reduction (from KRW 200,000 to KRW 165,000) triggered by downward revisions to 2024–2025 operating profit estimates amid near-term consumer device adjustments, while emphasizing that fundamental AI hardware momentum remains intact. Despite lowered headline numbers (2025F OP trimmed to KRW 936B), the investment thesis highlights resilient qualitative growth—anchored by 2025 AI accelerator FC-BGA mass production, rising MLCC content per device in AI smartphones, and enterprise PC refresh cycles—delivering solid +20% YoY operating profit growth in 2025.
To verify whether this investment thesis materializes as projected, key tracking points include the attainment of the revised 2025 operating profit forecast (KRW 935.7B), the concrete mass production timeline of AI accelerator FC-BGA substrates alongside server CPU substrate sales growth, the measurable expansion of MLCC content per unit across AI phones and enterprise PCs, and downstream demand resilience following 1H25 set inventory normalization. These developments can be tracked via upcoming quarterly financial disclosures, official company IR presentations, and regular regulatory filings.
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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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