Brokerage : DS Investment & Securities
Analyst : Dae-hyung Cho, RA: Jin-young Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Maintained)
Core Momentum : Sustaining structural recovery supported by expanding product mix in AI servers and automotive electronics alongside the ramp of AI accelerator FCBGA substrates despite 4Q seasonal destocking.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 200,000 (Maintained)
- Current Share Price (As of Oct 29, 2024): KRW 120,200 (Upside potential: 66.4%)
- Market Capitalization: KRW 8.98T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024F KRW 10.21T → 2025F KRW 11.13T
- Operating Profit: 2023A KRW 639.0B → 2024F KRW 786.0B (OPM 7.7%) → 2025F KRW 979.0B (OPM 8.8%)
- Net Profit (Controlling): 2023A KRW 423.0B → 2024F KRW 650.0B → 2025F KRW 737.0B
- EPS: 2023A KRW 5,617 → 2024F KRW 8,654 (+54.1% YoY) → 2025F KRW 9,815 (+13.4% YoY)
- PER: 2023A 27.3x → 2024F 13.9x → 2025F 12.2x
- PBR: 2023A 1.5x → 2024F 1.1x → 2025F 1.0x
- ROE: 2023A 5.5% → 2024F 8.0% → 2025F 8.4%
- 3Q24 Earnings Review: Consolidated Revenue of KRW 2.62T (+10.8% YoY), Operating Profit of KRW 224.9B (+22.2% YoY, OPM 8.6%), slightly missing market consensus (Revenue KRW 2.6T, Operating Profit KRW 236.2B) due to FX headwinds, but continuing YoY recovery momentum.
- 4Q24 Earnings Forecast: Projected Revenue of KRW 2.40T (+3.6% YoY), Operating Profit of KRW 172.3B (+56.1% YoY, OPM 7.2%). While top-line contraction across divisions is unavoidable compared to 3Q due to year-end customer inventory adjustments, the high-value product mix is expected to expand.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC): 3Q24 revenue reached KRW 1.20T (+9.2% YoY), driven by AI/server industrial applications and vehicle electrification. Maintained fab utilization at ~85% and inventory at ~4 weeks. Higher mix of high-capacitance and high-temperature parts is projected to drive blended ASP expansion.
- Package Solution Division: 3Q24 revenue posted KRW 558.2B (+27.0% YoY), propelled by rising demand for AI/server FCBGA. Commercial mass production for AI accelerators is set to commence in earnest.
- Optics & Communication Solutions: 3Q24 revenue reached KRW 860.0B (+4.2% YoY). Lower overseas client supply was offset by expanding automotive market share despite mass production for strategic flagship clients.
- Valuation Floor: Trading near its historical P/B valuation floor, downside appears limited at the current share price level with attention focused on gradual fundamental improvement.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not through the lens of near-term cyclical delays and 4Q seasonal customer destocking, but as an advanced electronics hardware manufacturer steadily improving its structural fundamental quality through high-value AI server and automotive mix enrichment. Downside appears limited at the current valuation level given that the stock trades near its historical P/B floor, while the impending mass production of AI accelerator FCBGA substrates and broadening AI applications offer potential upside revisions to earnings if downstream demand rebounds faster than anticipated.
To evaluate whether this investment thesis unfolds as projected, key tracking points include sustaining ~85% MLCC fab utilization and ~4-week inventory levels post-4Q destocking, continuous blended ASP growth fueled by high-capacitance/high-temperature MLCC mix, the commercial production execution of AI accelerator FCBGA substrates, and ongoing automotive market share gains in optics solutions. These factors can be monitored through upcoming quarterly earnings releases, official company 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.
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