Brokerage : Shinhan Securities
Analyst : Kang-ho Oh
Investment Rating : BUY (Maintained)
Target Price : KRW 210,000 (Raised)
Core Momentum : Proliferation of the AI market is driving high-value product mix expansion and simultaneous price (P) and volume (Q) gains across MLCCs and package substrates, accelerating earnings recovery.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Valuation Basis: Raised to KRW 210,000 (applied a target P/B of 1.9x, the historical average during the 2020–2021 recovery cycle, to 2024F BPS of KRW 108,817).
- Investment Rating: BUY (Maintained)
- Stock Data (As of April 29, 2024): Current Price KRW 151,300, Market Capitalization KRW 11.30 Trillion, Foreign Ownership 31.49%
- Key Financial Forecasts (2023 → 2024F → 2025F):
- Revenue: KRW 8.91 Trillion → KRW 10.17 Trillion → KRW 10.92 Trillion
- Operating Profit: KRW 639.4 Billion → KRW 891.3 Billion → KRW 1.07 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 767.9 Billion → KRW 884.8 Billion
- EPS: KRW 5,406 → KRW 9,839 → KRW 11,319
- BPS: KRW 101,129 → KRW 108,817 → KRW 117,502
- PER / PBR: 28.3x / 1.5x → 15.4x / 1.4x → 13.4x / 1.3x
- ROE: 5.5% → 9.4% → 10.1%
- EV/EBITDA: 7.9x → 5.8x → 5.0x
🚀 2. [Market Opportunities & Business Outlook]
- Q1 2024 Performance Review:
- Consolidated revenue reached KRW 2.6 Trillion (+30% YoY) and operating profit stood at KRW 180.3 Billion (+29% YoY, +63% QoQ), beating Shinhan’s estimate (KRW 170.7 Billion).
- Component: Revenue stood at KRW 1.0 Trillion (+24% YoY, +5% QoQ) led by high-value industrial product shipments for AI servers and power modules.
- Optics & Package: Optics & Communication revenue surged +47% YoY to KRW 1.2 Trillion on flagship and automotive camera shipments; Package Solution revenue reached KRW 430.0 Billion (+8% YoY).
- Q2 2024 Outlook & Growth Drivers:
- Q2 2024 revenue is forecast at KRW 2.41 Trillion, with operating profit estimated at KRW 216.2 Billion (+20% YoY, +20% QoQ, OPM 9.0%).
- Component revenue is projected to expand +11% YoY (+9% QoQ) to KRW 1.12 Trillion on simultaneous P and Q gains.
- Full-year 2024 Component division revenue is expected to reach KRW 4.5 Trillion (+15% YoY).
- AI Proliferation & Medium-Term Outlook:
- The primary catalyst for the 2024 earnings inflection is the unfolding AI hardware cycle, driving high-value MLCC and packaging substrate adoption.
- On-device AI adoption across smartphones is anticipated to accelerate Optical Solution division growth more noticeably by 2025.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a hardware supplier navigating a cyclical downturn, but as an enterprise entering a clear earnings turnaround and valuation re-rating cycle driven by rising AI content and high-value industrial/automotive mix expansion. The overarching perspective emphasizes simultaneous volume (Q) and price (P) improvements in MLCCs and substrates alongside multi-year growth visibility into 2025 rather than past IT set demand sluggishness.
To assess the progression of this investment thesis moving forward, verification should focus on whether Q2 Component revenue surpasses KRW 1.1 Trillion to confirm ongoing P and Q expansion, whether operating margin successfully stabilizes at 9.0% or above, and whether annual Component sales achieve the KRW 4.5 Trillion target toward KRW 1.07 Trillion in operating profit by 2025. These operational developments can be monitored through upcoming quarterly earnings releases, official investor presentations, and periodic 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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