Brokerage : Kiwoom Securities
Analyst : So-won Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 210,000 (Maintained)
Core Momentum : Strong demand for high-value AI server and automotive MLCCs, coupled with market-beating FC-BGA substrate expansion and new H2 2024 AI accelerator supply, is projected to drive simultaneous margin recovery across core divisions.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: Target Price maintained at KRW 210,000, Rating maintained at BUY
- Stock Data (As of July 31, 2024): Share Price KRW 159,600, Market Capitalization KRW 11.92 Trillion, Foreign Ownership 34.8%
- Key Financial Forecasts (2023 → 2024F → 2025F):
- Revenue: KRW 8.91 Trillion → KRW 10.37 Trillion → KRW 11.54 Trillion
- Operating Profit: KRW 639.4 Billion → KRW 840.3 Billion → KRW 1.14 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 683.4 Billion → KRW 868.3 Billion
- EPS: KRW 5,450 → KRW 8,806 → KRW 11,189 (YoY: -56.9% → +61.6% → +27.1%)
- PER / PBR: 28.1x / 1.51x → 18.1x / 1.47x → 14.3x / 1.35x
- Operating Margin: 7.2% → 8.1% → 9.9%
- ROE: 5.5% → 8.4% → 9.8%
🚀 2. [Market Opportunities & Business Outlook]
- Q2 2024 Performance Review:
- Consolidated revenue reached KRW 2.58 Trillion (-2% QoQ, +16% YoY) and operating profit stood at KRW 208.1 Billion (+15% QoQ, +2% YoY), meeting consensus estimates (KRW 207.8 Billion).
- Component (MLCC) led the performance as shipment volumes and ASP both rose by +7% QoQ on robust demand from IT, industrial (AI server), and automotive applications.
- Package Solution beat expectations driven by robust AI server demand and client share gains despite wider industry FC-BGA oversupply.
- Optics & Communication faced post-flagship seasonality, offset by initial folded-zoom ramp-up for a key client.
- Q3 2024 Outlook:
- Revenue is forecast at KRW 2.69 Trillion (+4% QoQ, +14% YoY) and operating profit at KRW 247.3 Billion (+19% QoQ, +34% YoY).
- Both Component and Package Solution divisions are projected to record double-digit QoQ growth in revenue and operating profit.
- Component operating margin is expected to reach a 9-quarter high of 14.3% (+2.1%p QoQ, +3.9%p YoY) boosted by AI server/automotive demand and IT seasonality.
- Catalysts & Structural Drivers:
- AI server MLCC content per unit is 5x to 10x higher in quantity and 2x to 4x higher in capacitance versus conventional servers, sustaining upcycle momentum despite sluggish general IT set demand.
- Package Solution outpaces general market growth, with commercial supply of AI accelerator FC-BGA scheduled to ramp up in H2 2024.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a commodity parts maker held back by sluggish consumer IT demand, but as a structurally evolving player leveraging AI server and automotive end-markets to deliver differentiated profitability across its MLCC and substrate divisions. The core perspective emphasizes product mix enrichment and market share gains—evidenced by AI server MLCC content surges and new AI accelerator FC-BGA entry—over broader macro hardware demand trends.
To assess the validity of this investment thesis moving forward, verification should focus on whether the Component division reaches its 9-quarter peak operating margin target (14.3%) in Q3, whether commercial shipments of AI accelerator FC-BGA officially commence in H2 2024, and whether double-digit profit expansion is sustained across the substrate unit. These developments can be verified through future quarterly earnings releases, investor 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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