Brokerage : Eugene Investment & Securities
Analyst : Seung-woo Lee, So-jeong Yim
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Raised)
Core Momentum : Continued product mix optimization toward AI and automotive segments, coupled with a substrate recovery driven by general server upgrades and enterprise PC replacement cycles, is projected to drive structural earnings expansion.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: Target Price raised to KRW 200,000 (applied a target P/B of 1.9x to 2025E BPS), Rating maintained at BUY
- Stock Data (As of May 30, 2024): Current Price KRW 156,600, Market Capitalization KRW 11.70 Trillion, Foreign Ownership 31.9%
- Key Financial Forecasts (2023A → 2024E → 2025E):
- Revenue: KRW 8.91 Trillion → KRW 10.12 Trillion → KRW 10.92 Trillion
- Operating Profit: KRW 639.0 Billion → KRW 878.0 Billion → KRW 1.10 Trillion
- Net Profit: KRW 450.0 Billion → KRW 713.0 Billion → KRW 863.0 Billion
- EPS: KRW 5,663 → KRW 8,999 → KRW 10,735 (YoY Growth: -56.9% → +58.9% → +19.3%)
- PER / PBR: 27.7x / 1.5x → 17.4x / 1.6x → 14.6x / 1.5x
- ROE: 5.5% → 8.6% → 10.0%
- EV/EBITDA: 8.0x → 6.7x → 4.9x
🚀 2. [Market Opportunities & Business Outlook]
- Q1 2024 Performance Review:
- Consolidated revenue reached KRW 2.62 Trillion (+30% YoY) and operating profit stood at KRW 180.3 Billion (+29% YoY).
- Component revenue grew +5% QoQ despite sluggish end-set demand, supported by product mix improvements from AI industrial and automotive MLCCs.
- Optics & Communication revenue rose +32% QoQ on the early release of strategic flagship smartphones, robust automotive camera module shipments, and high-spec production for Chinese clients.
- Package Solution revenue declined 3% QoQ due to end-market softness.
- 2024 Outlook & Growth Drivers by Division:
- Full-year 2024 revenue is forecast at KRW 10.12 Trillion, with operating profit estimated at KRW 877.9 Billion.
- Component: Expected to achieve gradual recovery backed by reduced channel inventory and continuous mix enhancement toward AI and automotive applications.
- Optics & Communication: Second-half flagship new model rollouts are anticipated to drive momentum from Q3.
- Package Solution: Rebound projected in H2, supported by increasing replacement demand for general servers, AI PC launches, and corporate PC upgrades ahead of Windows 10 end-of-support.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a hardware supplier held back by sluggish consumer IT hardware volume, but as an enterprise entering a synchronized structural recovery cycle led by an expanding AI and automotive product mix alongside upcoming hardware upgrade cycles. The overarching perspective places greater significance on the high-value mix enhancement in MLCCs and the tangible substrate turnaround driven by corporate PC and server refreshes than on baseline consumer demand volatility.
To evaluate the ongoing progression of this investment thesis, verification should focus on whether enterprise PC replacements and server demand translate into a top-line rebound for the Package Solution division in H2, whether high-value AI and automotive MLCC shipments maintain Component division margin expansion, and whether operational execution supports the trajectory toward KRW 1.10 Trillion in operating profit by 2025. These developments can be tracked through upcoming quarterly earnings releases, investor relations presentations, and periodic regulatory filings.
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