Brokerage : Kiwoom Securities
Analyst : So-won Kim
Investment Rating : BUY (Maintained, Top Pick)
Target Price : KRW 210,000 (Maintained)
Core Momentum : Positioned for a +43% YoY operating profit surge in 2025 driven by solid high-value AI/automotive mix resilience and the commercial ramp-up of AI accelerator FC-BGA substrates starting in 4Q24.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 210,000 (Maintained, deemed excessively undervalued at 12M Forward P/B 1.0x, Top Pick maintained)
- Current Share Price (As of Oct 29, 2024): KRW 120,200
- Market Capitalization: KRW 8.98T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.9094T → 2024F KRW 10.2279T (Text: ~KRW 10.2T, +15% YoY) → 2025F KRW 11.5807T (Text: ~KRW 11.6T, +13% YoY)
- Operating Profit: 2023A KRW 639.4B → 2024F KRW 781.8B (+22% YoY, OPM 7.6%) → 2025F KRW 1,114.5B (+43% YoY, OPM 9.6%)
- Net Profit (Controlling): 2023A KRW 423.0B → 2024F KRW 600.9B (+42.1% YoY) → 2025F KRW 857.1B (+42.6% YoY)
- EPS: 2023A KRW 5,450 → 2024F KRW 7,744 → 2025F KRW 11,045
- PER: 2023A 28.1x → 2024F 15.5x → 2025F 10.9x
- PBR: 2023A 1.51x → 2024F 1.12x → 2025F 1.02x
- ROE: 2023A 5.5% → 2024F 7.4% → 2025F 9.8%
- Dividend Yield (2024E): 1.1%
- 3Q24 Earnings Review: Consolidated Revenue of KRW 2.6153T (+11% YoY, +2% QoQ), Operating Profit of KRW 224.9B (+20% YoY, +6% QoQ, OPM 9%), meeting market expectations (Consensus KRW 236.2B, Kiwoom KRW 229.2B). Component (MLCC) shipments and OPM (12%) were flat QoQ due to softer IT set demand, but blended ASP rose +4% QoQ on AI server and automotive demand, beating internal forecasts for 3 consecutive quarters. Substrates achieved record quarterly revenue driven by client market share gains and server substrate growth.
- 4Q24 Earnings Forecast: Projected Revenue of KRW 2.4082T (+4% YoY, -8% QoQ), Operating Profit of KRW 168.5B (+53% YoY, -25% QoQ), missing consensus (KRW 209.6B) due to year-end destocking. However, solid high-value AI/auto demand and stabilized inventory will limit profit declines compared to 2022–2023. As scheduled, the commercial ramp-up of AI accelerator FC-BGA substrates begins in 4Q24.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC): Solid AI server and automotive demand counters general IT softness, lifting blended ASPs (+4% QoQ in 3Q24). Gartner projects 2025 AI PC penetration to reach 43% (+26%p YoY), accelerating supply-demand tightening for MLCCs.
- Package Substrate Division: Achieved record quarterly sales in 3Q24 driven by client market share gains and expanding server substrate shipments with ongoing margin improvement. In addition to 4Q24 AI accelerator FC-BGA deliveries, growing AI PC BGA demand in 2025 will expand total AI exposure.
- Optics & Communication Solutions: Recorded better-than-expected 3Q24 results as automotive camera growth compensated for lower smartphone shipments to Chinese and North American clients.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a cyclical supplier burdened by consumer IT weakness and 4Q seasonal destocking, but as an advanced electronics hardware manufacturer demonstrating resilient margin defense through stabilized inventories and high-value AI/automotive mix enrichment. Beyond transient 4Q destocking, the investment thesis centers on the commercial ramp-up of AI accelerator FC-BGA substrates starting in 4Q24 and supply-demand tightening in MLCCs driven by AI PC and smartphone penetration, delivering a powerful earnings surge to KRW 1,114.5B in 2025 operating profit (+43% YoY).
To evaluate whether this investment thesis unfolds as projected, key tracking points include achieving full-year 2025 operating profit guidance (KRW 1,114.5B, +43% YoY), the commercial execution and revenue expansion of AI accelerator FC-BGA substrates, sustained blended ASP expansion in MLCCs driven by AI PC/device adoption, and ongoing sales growth in automotive cameras. These developments can be monitored through upcoming quarterly financial announcements, official company IR presentations, and regulatory filings.
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