Brokerage : SK Securities
Analyst : Hyoung-woo Park, Min-gyu Kwon
Investment Rating : BUY (Maintained)
Target Price : KRW 224,000 (Raised)
Core Momentum : Structural earnings recovery is projected to accelerate driven by supply constraints from disciplined industry CAPEX, utilization approaching 90%, and potential broad-based ASP hikes following product mix improvements.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Valuation Basis: Raised to KRW 224,000 (applied a target PBR of 2.0x, representing the lower band of historical upcycle periods, to 2024E BPS).
- Investment Rating: BUY (Maintained)
- Stock Data (As of July 31, 2024): Current Price KRW 159,600, Market Capitalization KRW 11.92 Trillion.
- Key Financial Forecasts (2023 → 2024E → 2025E):
- Revenue: KRW 8.91 Trillion → KRW 10.68 Trillion → KRW 11.79 Trillion
- Operating Profit: KRW 639.0 Billion → KRW 900.0 Billion → KRW 1.28 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 706.0 Billion → KRW 939.0 Billion
- EPS: KRW 5,552 → KRW 9,099 → KRW 12,096
- PER / PBR: 27.6x / 1.5x → 17.5x / 1.4x → 13.2x / 1.3x
- ROE: 5.5% → 8.6% → 10.5%
🚀 2. [Market Opportunities & Business Outlook]
- Q2 2024 Performance Review:
- Consolidated operating profit reached KRW 208.1 Billion (+2% YoY), meeting consensus estimates of KRW 207.8 Billion.
- Operating Profit by Division: Optics & Communication KRW 23.0 Billion (-63% QoQ), Component (MLCC) KRW 145.2 Billion (+50% QoQ), Package Solution KRW 39.9 Billion (+93% QoQ).
- The MLCC division led the rebound with shipment volumes and prices increasing by 8% QoQ each.
- Q3 2024 & H2 Outlook:
- Operating profit for Q3 2024 is projected at KRW 241.5 Billion (+31% YoY).
- MLCC shipments are expected to grow 12% QoQ in Q3, with the utilization rate rising from 85% in Q2 to roughly 90%.
- Channel inventory currently stands below normal levels at approximately 4 weeks.
- Industry Dynamics & Catalysts:
- Supply constraints are emerging as global MLCC suppliers maintain conservative CAPEX despite sluggish end-demand for IT hardware.
- While current ASP increases are primarily driven by product mix optimization, widespread price hikes could materialize as utilization exceeds 90%.
- The revenue share of strategic smartphone clients within MLCC has dropped below 10%, reducing cyclical exposure to specific handset sales.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a legacy component supplier tethered to smartphone cycle fluctuations, but as a disciplined high-value producer entering a structural margin expansion phase driven by industry-wide supply limits and diversified demand. The overarching perspective emphasizes pricing power recovery and favorable supply dynamics as utilization approaches 90%, rather than dependence on end-market volume growth.
To assess the progression of this investment thesis, verification should center on whether the MLCC capacity utilization stably reaches and sustains 90%, whether sub-normal channel inventory triggers direct pricing increases beyond product mix effects, and whether operating profit expansion persists across the Component and Package divisions. These variables can be tracked through upcoming quarterly earnings releases, official company presentations, and periodic financial reports.
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