Brokerage : Kyobo Securities
Analyst : Bo-young Choi
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Raised)
Core Momentum : Broad-based demand recovery in MLCCs across IT, industrial, and automotive applications, alongside entry into AI FC-BGA mass production in 4Q24 and glass substrate advancements, is projected to accelerate earnings growth.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: Target Price raised to KRW 200,000, Rating maintained at BUY
- Stock Data (As of April 11, 2024): Current Price KRW 156,500, Market Capitalization KRW 11.91 Trillion, Foreign Ownership 31.74%
- Key Financial Forecasts (2023.12 → 2024.12E → 2025.12E):
- Revenue: KRW 8.91 Trillion → KRW 9.59 Trillion → KRW 10.23 Trillion
- Operating Profit: KRW 639.0 Billion → KRW 827.0 Billion → KRW 963.0 Billion
- Net Profit: KRW 450.0 Billion → KRW 679.0 Billion → KRW 821.0 Billion
- EPS: KRW 5,617 → KRW 8,483 → KRW 10,272 (YoY: -56.9% → +51.0% → +21.1%)
- PER / PBR: 27.3x / 1.5x → 18.5x / 1.5x → 15.3x / 1.3x
- OP Margin: 7.2% → 8.6% → 9.4%
- ROE: 5.5% → 7.8% → 8.8%
🚀 2. [Market Opportunities & Business Outlook]
- Q1 2024 Earnings Outlook:
- Consolidated revenue is projected at KRW 2.40 Trillion (+18.6% YoY, +4.0% QoQ) and operating profit at KRW 173.3 Billion (+23.7% YoY, +57.1% QoQ), slightly beating consensus (KRW 167.8 Billion).
- Component: Utilization rate in the mid-70% range, ASP +3%, inventory healthy at ~5 weeks; top-line and profit expansion supported by broad IT, industrial, and automotive demand alongside favorable FX.
- Optics & Communication: Solid earnings backed by flagship smartphone launches and rising high-spec camera adoption in Greater China.
- Package Solution: Slower recovery due to consumer PC weakness and muted server/network substrate demand.
- Annual Projections & Growth Drivers:
- Full-year 2024 revenue is forecast at KRW 9.59 Trillion (+7.6% YoY) and operating profit at KRW 827.0 Billion (OP Margin 8.6%).
- AI smartphone proliferation is expected to drive higher MLCC capacitance per device and higher pricing.
- High-End Substrate Commercialization:
- Mass production of high-barrier AI FC-BGA substrates scheduled for 4Q24 (supplying GPU substrates via strategic partners).
- Prototype production of glass substrates underway this year, targeting a full commercial mass production structure by 2026.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a component supplier burdened by sluggish consumer PC demand, but as a core enabler entering an earnings recovery cycle led by Component utilization gains and well-positioned exposure to key growth trends spanning AI smartphones, AI server FC-BGA, and glass substrates. The overarching perspective places greater significance on the early margin inflection in the Component division and high-value packaging milestones (4Q24 AI FC-BGA and glass substrate prototypes) than on the gradual pace of general IT set recovery.
To assess the progression of this investment thesis moving forward, verification should focus on whether Q1 operating profit confirms the beat toward KRW 173.3 Billion, whether Component capacity utilization and shipments continue their upward trajectory in Q2, and whether the strategic rollout of GPU-oriented AI FC-BGA substrates in 4Q24 and glass substrate prototype milestones proceed as planned. These operational developments can be monitored through upcoming quarterly financial announcements, investor relations materials, and periodic regulatory filings.
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