Brokerage : Daishin Securities
Analyst : Kang-ho Park
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Maintained)
Core Momentum : Rising AI feature adoption across IT devices and the commercial rollout of AI server FC-BGA substrates in H2 2024 are projected to enrich the high-value product mix and accelerate earnings growth.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: 6-Month Target Price maintained at KRW 200,000, Rating maintained at BUY
- Stock Data (As of July 2, 2024): Current Price KRW 153,800, Market Capitalization KRW 11.70 Trillion, Foreign Ownership 33.13%
- Key Financial Forecasts (2023A → 2024F → 2025F):
- Revenue: KRW 8.91 Trillion → KRW 10.01 Trillion → KRW 10.85 Trillion
- Operating Profit: KRW 639.0 Billion → KRW 886.0 Billion → KRW 1.08 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 722.0 Billion → KRW 828.0 Billion
- EPS: KRW 5,450 → KRW 9,309 → KRW 10,643
- BPS: KRW 101,129 → KRW 110,114 → KRW 120,505
- PER / PBR: 28.1x / 1.5x → 15.7x / 1.4x → 13.7x / 1.3x
- ROE: 5.5% → 8.8% → 9.2%
🚀 2. [Market Opportunities & Business Outlook]
- Q2 2024 Earnings Outlook:
- Consolidated operating profit is projected at KRW 214.7 Billion (+19.1% QoQ, +4.8% YoY), meeting consensus (KRW 209.9 Billion).
- Despite soft consumer handset demand, automotive and industrial MLCC strength is driving utilization gains and margin improvement (Component OPM estimated +4.9%p QoQ).
- Q3 2024 & Annual Trajectory:
- Q3 2024 operating profit is estimated at KRW 256.3 Billion (+19.4% QoQ, +39.3% YoY) on sustained utilization ramp-up.
- Annual operating profit is forecast at KRW 886.5 Billion (+38.5% YoY) for 2024, advancing to KRW 1.08 Trillion (+21.8% YoY) in 2025 as higher-margin mix enhances operating leverage.
- Strategic Expansion & Device AI Catalysts:
- Package Solution: Mass production of AI server FC-BGA substrates to commence from the Vietnam plant (~KRW 1 Trillion investment) in H2 2024, securing tier-1 global clients. Glass substrate pilot production is planned for 2025 with commercial rollout targeted for 2026.
- On-Device AI Transformation: AI PC launches in Q3 2024 and Apple Intelligence integration in iPhone 16 mark the onset of a device replacement cycle, driving broad demand for MLCCs, substrates, and optical modules through 2025.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as an IT component supplier tied to broad consumer market cycles, but as a high-value hardware producer undergoing structural profitability expansion powered by on-device AI proliferation and commercial entry into AI server FC-BGA substrates. The core perspective highlights qualitative margin expansion and component specification upgrades resulting from AI adoption, rather than simple headline shipment recovery.
To evaluate the ongoing validity of this investment thesis, verification should focus on whether Q3 operating profit achieves the projected ~19% QoQ growth to KRW 256.3 Billion, whether mass production and client shipments of AI server FC-BGA substrates successfully commence from the Vietnam facility in H2 2024, and whether increasing AI device penetration translates into sustained margin expansion across core divisions. These indicators can be tracked through upcoming quarterly earnings releases, official company presentations, and periodic financial reports.
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