Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Maintained)
Core Momentum : Entering a high-utilization phase (>90%) for MLCCs in 3Q24 driving strong operational leverage, combined with easing Japanese Yen depreciation and growing server substrate demand.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 200,000 (Maintained; deemed undervalued relative to global peers, with easing Yen headwinds and improving industry fundamentals)
- Current Share Price (As of Jul 31, 2024): KRW 159,600 (Upside potential: 25.3%)
- Market Capitalization: KRW 11.92T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024F KRW 10.51T (Table: KRW 10,507B) → 2025F KRW 11.71T (Table: KRW 11,706B)
- Operating Profit: 2023A KRW 639.0B → 2024F KRW 832.0B (OPM 7.9%) → 2025F KRW 1.04T (Table: KRW 1,035.0B, OPM 8.8%)
- Net Profit (Controlling): 2023A KRW 423.0B → 2024F KRW 676.0B → 2025F KRW 827.0B
- EPS: 2023A KRW 5,450 → 2024F KRW 8,716 (+59.9% YoY) → 2025F KRW 10,656
- PER: 2023A 28.1x → 2024F 18.3x → 2025F 15.0x
- PBR: 2023A 1.5x → 2024F 1.4x → 2025F 1.3x
- ROE: 2023A 5.5% → 2024F 8.2% → 2025F 9.2%
- Dividend Yield: 2023A 0.8% → 2024F 0.9% → 2025F 1.2%
- 2Q24 Earnings Review: Consolidated Revenue of KRW 2.58T (+16% YoY), Operating Profit of KRW 208.1B (+2% YoY). Revenue exceeded consensus, while Operating Profit was broadly in line with consensus. Solid MLCC demand drove P and Q growth by +7% and +6% QoQ, respectively. Package Solutions grew via ARM processor substrates and smartphone APs, while Optics Solutions saw strong pre-order demand for key clients’ foldable devices.
- 3Q24 Earnings Forecast: Projected Revenue of KRW 2.72T (+15% YoY), Operating Profit of KRW 253.2B (+38% YoY), sitting at +5% and -3% vs consensus expectations. MLCC P and Q are estimated to grow +1% and +13% QoQ, respectively. Package Solutions is forecast to grow +13% QoQ on server demand, while Optics Solutions is expected to contract -9% QoQ due to earlier parts pull-in and 618 festival base effects.
🚀 2. [Market Opportunities & Business Outlook]
- MLCC Fab Utilization & Operational Leverage: With the entry into the 3Q peak season, MLCC fab utilization is expected to surge from 85% in 2Q24 to over 90% in 3Q24. Given MLCC’s low raw material cost structure (~20%), rising utilization unlocks strong operational leverage. Sustained tight utilization could create room for further ASP (P) hikes beyond current levels.
- Package Substrate Division: While PC recovery remains gradual, increasing demand for server substrates is projected to sustain a +13% QoQ revenue expansion.
- Easing FX Pressure: Easing from the extreme Japanese Yen depreciation trend that weighed on 2Q24 conditions enhances competitive pricing dynamics relative to global peers.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not just through quarterly consensus alignment, but as an advanced electronics hardware manufacturer positioned for operational leverage expansion as MLCC fab utilization surpasses 90% in 3Q24. Trading at an undervalued level relative to global peers, the core investment thesis highlights easing Yen headwinds and MLCC’s structural cost advantage (~20% raw material mix), where tight fab utilization (>90%) provides potential pricing (P) upside and propels 2025 operating profit past the KRW 1T mark to KRW 1.04T.
To evaluate whether this investment thesis progresses according to expectations, key tracking points include achieving the 3Q24 operating profit projection (KRW 253.2B, +38% YoY), progress toward 2024 (KRW 832.0B) and 2025 (KRW 1.035T) operating profit targets, confirming MLCC fab utilization settling above 90% alongside potential ASP hikes, margin resilience amid Yen stabilization, and sustained server substrate growth in the Package division. These developments can be monitored through upcoming quarterly financial announcements, official company IR presentations, and regulatory filings.
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