Brokerage : Yuanta Securities
Analyst : Anna Lee
Investment Rating : BUY (Initiation)
Target Price : KRW 190,000 (Initiation)
Core Momentum : Surging MLCC content per device across AI hardware and tight high-spec supply driving expectations for 2H25 ASP hikes, combined with mid-to-long term structural growth in AI server and automotive FC-BGA substrates.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Initiation) / KRW 190,000 (Initiated; derived by applying a target P/B multiple of 1.4x—the past 4-year historical average—to 2025E BPS of KRW 134,085, calculating KRW 189,999 rounded to KRW 190,000)
- Current Share Price (As of Sep 4, 2024): KRW 134,900 (Upside potential: 41%)
- Market Capitalization: KRW 10.26T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024F KRW 10.57T → 2025F KRW 11.71T
- Operating Profit: 2023A KRW 639.0B → 2024F KRW 905.0B (OPM 8.6%) → 2025F KRW 1.26T (Table: KRW 1,264.0B, OPM 10.8%)
- Net Profit (Controlling): 2023A KRW 423.0B → 2024F KRW 747.0B → 2025F KRW 956.0B
- PER: 2023A 25.8x → 2024F 13.6x → 2025F 10.6x
- PBR: 2023A 1.4x → 2024F 1.1x → 2025F 1.0x
- ROE: 2023A 5.5% → 2024F 8.9% → 2025F 10.0%
- Dividend Yield: 0.75%
- 3Q24 Earnings Preview: Projected Revenue of KRW 2.637T (Text: ~KRW 2.6T, +11.7% YoY, +2.2% QoQ), Operating Profit of KRW 256.3B (Table: KRW 256.0B, +39.3% YoY, +23.2% QoQ, OPM 9.7%), slightly beating consensus (Operating Profit KRW 252.0B). Driven by flagship new product launches from key clients alongside growing automotive and AI server demand. While Package Solutions faces near-term profitability limits due to high PC exposure, expanding AI server demand drives top-line growth.
🚀 2. [Market Opportunities & Business Outlook]
- AI-Driven MLCC Content Expansion: AI proliferation drives significant gains in MLCC content per system (smartphones: 80–100 units; AI notebooks/PCs: ~1,000 units; AI servers: 6,000–7,000 units; automotive: 3,000–20,000 units). With global MLCC utilization nearing 85%, tight high-spec supply supports expectations for further ASP increases in 2H25.
- Package Solution Division (FC-BGA): Despite near-term margin constraints from high PC exposure, AI server FC-BGA demand is accelerating, expanding its revenue mix within the division despite broader adoption of competing packaging technologies such as Fan-Out.
- Automotive Substrate Potential: Long-term automotive electronics growth provides substantial structural runway for FC-BGA substrates due to lower adoption of competing packaging technologies in vehicle applications.
📝 Editor’s Comment (Perspective)
The analyst initiated coverage on Samsung Electro-Mechanics with a BUY rating and a target price of KRW 190,000, applying a 1.4x target P/B multiple (the past 4-year average) to 2025E BPS (KRW 134,085). The investment thesis looks beyond near-term PC substrate mix headwinds to focus on the compounding benefits of AI hardware adoption: tight high-spec MLCC supply approaching 85% global utilization with potential 2H25 ASP upside, and mid-to-long term structural growth in AI server and automotive FC-BGA substrates propelling 2025 operating profit to KRW 1.26T.
To evaluate whether this investment thesis progresses as projected, key tracking points include achieving the 3Q24 operating profit forecast (KRW 256.3B), reaching full-year 2025 operating profit guidance (KRW 1.264T), verifying tight supply conditions that could trigger high-spec MLCC ASP increases in 2H25, and monitoring the expansion rate of AI server and automotive FC-BGA revenue share. These developments can be monitored through upcoming quarterly financial announcements, 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.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
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