Brokerage : Hana Securities
Analyst : Rok-ho Kim, RA: Young-gyu Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Maintained, 12M Target Price)
Core Momentum : Securing earnings growth visibility through structural product mix enrichment in AI servers and automotive electronics, transitioning to large-body FCBGA substrate expansion in 2025.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 200,000 (Maintained, keeping the target price unchanged as 2025 weight increases with <5% downward variance, despite revising down 2024F and 2025F operating profits by 11% and 16% respectively)
- Current Share Price (As of Oct 29, 2024): KRW 120,200
- Market Capitalization: KRW 8.98T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024F KRW 10.24T → 2025F KRW 11.19T
- Operating Profit: 2023A KRW 639.4B → 2024F KRW 782.5B (+22% YoY) → 2025F KRW 1.02T (+30% YoY in text, Table: KRW 1,020.5B)
- Net Profit: 2023A KRW 423.0B → 2024F KRW 564.1B → 2025F KRW 678.5B
- EPS: 2023A KRW 5,450 → 2024F KRW 7,269 (+33.38% YoY) → 2025F KRW 8,743 (+20.28% YoY)
- PER: 2023A 28.11x → 2024F 16.54x → 2025F 13.75x
- PBR: 2023A 1.49x → 2024F 1.08x → 2025F 1.01x
- ROE: 2023A 5.50% → 2024F 6.91% → 2025F 7.72%
- BPS: 2023A KRW 103,020 → 2024F KRW 111,292 → 2025F KRW 118,914
- DPS: 2023A KRW 1,150 → 2024F KRW 1,150 → 2025F KRW 1,150
- 3Q24 Earnings Review: Consolidated Revenue of KRW 2.62T (+11% YoY, +1% QoQ), Operating Profit of KRW 224.9B (+22% YoY, +8% QoQ), missing Hana estimates and market consensus due to weak smartphone/PC demand recovery and KRW appreciation. However, Component division expanded blended ASP on AI/automotive mix, while Package Solutions improved top-line and profitability on ARM PC BGA and AI/server/ADAS FCBGA shipments.
- 4Q24 Earnings Forecast: Projected Revenue of KRW 2.42T (+5% YoY, -7% QoQ), Operating Profit of KRW 169.2B (+53% YoY, -25% QoQ). While general IT MLCC/BGA and camera modules face year-end inventory destocking, high-value AI/server and automotive component supply is forecast to expand steadily.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC): Primary earnings driver for 2024. Rising proportion of AI server and automotive applications continues to drive product mix enhancement and blended ASP expansion.
- Package Substrate Division: Key earnings catalyst for 2025. Full-scale delivery of ARM PC BGAs and large-body FCBGA for AI/server CPUs, GPUs, accelerators, and automotive ADAS is set to accelerate division profitability.
- Optics & Communication Solutions: 3Q24 revenue contracted QoQ and YoY due to reduced mid-to-low tier shipments to Greater China clients. 4Q faces seasonal destocking, with early production runs for next-generation flagship smartphones serving as a key swing factor.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a cyclical supplier exposed to muted smartphone and PC demand, but as an advanced electronics hardware manufacturer driving structural mix transformation by capitalizing on robust AI/server and automotive demand. Despite trimming 2024 and 2025 operating profit forecasts (-11% and -16% respectively) due to macro and FX headwinds, the investment thesis underscores the sequential profit drivers—MLCC product mix gains in 2024 transitioning to large-body AI/server FCBGA expansion in 2025—which underpin high visibility for +30% YoY operating profit growth in 2025.
To evaluate whether this investment thesis unfolds as projected, key tracking points include achieving the 2025 full-year operating profit projection (KRW 1.02T), sustained blended ASP increases driven by expanding AI server and automotive MLCC mix, the commercial expansion timeline of large-body FCBGA substrates for AI accelerators, and early production ramp intensity for new flagship smartphone cameras following 4Q destocking. These factors can be monitored through upcoming quarterly financial announcements, official company IR releases, and regulatory filings.
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