Brokerage : Meritz Securities
Analyst : Seung-soo Yang
Investment Rating : Buy (Maintained)
Target Price : KRW 200,000 (Maintained, 12M Target Price)
Core Momentum : Set for a structural earnings rebound in 2025 past 2H24 IT destocking, propelled by automotive/industrial resilience and surging MLCC content across AI servers and On-Device AI devices.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy (Maintained) / KRW 200,000 (Maintained; recommending accumulation based on 2025 MLCC structural growth as 12MF P/B trades at 1.16x, below the historical valuation floor of 1.2x since 2016)
- Current Share Price (As of Sep 24, 2024): KRW 138,200 (Upside potential: 44.7%)
- Market Capitalization: KRW 10.32T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024E KRW 10.40T → 2025E KRW 11.07T → 2026E KRW 11.92T
- Operating Profit: 2023A KRW 639.4B → 2024E KRW 804.7B (+25.9% YoY) → 2025E KRW 1.03T (Table: KRW 1,028.9B, +27.9% YoY) → 2026E KRW 1.19T
- Net Profit (Controlling): 2023A KRW 423.0B → 2024E KRW 640.1B → 2025E KRW 863.7B → 2026E KRW 1.01T
- EPS: 2023A KRW 5,617 → 2024E KRW 8,523 (+51.7% YoY) → 2025E KRW 11,517 (+35.1% YoY) → 2026E KRW 13,414 (+16.5% YoY)
- PER: 2023A 27.3x → 2024E 16.2x → 2025E 12.0x → 2026E 10.3x
- PBR: 2023A 1.5x → 2024E 1.3x → 2025E 1.2x → 2026E 1.1x
- ROE: 2023A 5.5% → 2024E 7.9% → 2025E 9.8% → 2026E 10.4%
- 3Q24 Earnings Preview: Projected Revenue of KRW 2.6548T (+12.5% YoY), Operating Profit of KRW 225.3B (+22.4% YoY), missing market consensus (KRW 252.6B) by -10.6%. High downstream inventory limited IT order expansion, while FX headwinds from a lower USD/KRW rate caused blended ASP to contract slightly despite AI expectations.
- 4Q24 Earnings Forecast: Projected Operating Profit of KRW 191.0B, missing consensus (KRW 225.8B) by -15.4% due to year-end fab utilization cuts from heightened inventory caution. However, automotive and industrial demand will maintain YoY profit growth.
🚀 2. [Market Opportunities & Business Outlook]
- AI Server MLCC Expansion: Preemptive MLCC content growth is materializing in AI servers. According to Murata, AI servers require roughly 10–20x or more MLCC units and 2–4x higher capacitance compared to conventional servers.
- On-Device AI Proliferation: AI benefits are projected to expand into IT sets in 2025. AI smartphones and AI PCs are expected to drive MLCC content increases of >+10% / >+30% in capacitance and >+5% / >+20% in volume, respectively (resembling the 15–20% unit content surge seen during the 4G-to-5G transition).
- 2025 Rebound: Full-year 2025 Revenue is forecast at KRW 11.07T with Operating Profit reaching KRW 1.03T (+27.9% YoY), crossing the KRW 1T mark.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not through the lens of near-term 2H24 IT demand softness and year-end inventory digestion, but as an advanced electronics hardware manufacturer positioned for a structural rebound in 2025. With the stock trading at a 12MF P/B of 1.16x (below the post-2016 floor of 1.2x), downside impact from short-term earnings cuts is limited, while the investment thesis highlights the diffusion of AI-driven MLCC content growth—from AI servers (>10–20x) to On-Device AI smartphones and PCs in 2025—driving full-year operating profit to KRW 1.03T.
To verify whether this investment thesis materializes as projected, key tracking points include the attainment of the full-year 2025 operating profit forecast (KRW 1.03T), the persistence of high-end MLCC order volume for AI servers, measurable capacitance (+10%/+30%) and unit (+5%/+20%) gains across next-generation AI smartphones and PCs, and valuation re-rating from the 1.16x P/B level. These factors can be monitored through upcoming quarterly financial disclosures, official company IR presentations, 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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