Brokerage : iM Hi Investment & Securities
Analyst : Eui-young Koh
Investment Rating : Buy (Maintain)
Target Price : KRW 185,000 (Maintain)
Core Momentum : Quarterly earnings bottoming in 4Q23 on depleted channel inventories, with 2H24 rebound driven by AI server FC-BGA projects and structural growth in automotive MLCCs
📊 1. [Valuation & Key Financial Metrics]
Target Price & Valuation Basis
- Maintained Buy rating with a Target Price of KRW 185,000
- Upside potential of 33.3% based on closing price of KRW 138,800 (February 8, 2024)
Financial Forecast & Key Metrics (K-IFRS Consolidated)
- 2022: Revenue KRW 9.425T, Operating Profit KRW 1.183T, Net Profit KRW 981B, EPS KRW 12,636, BPS KRW 97,145, P/E 10.3x, P/B 1.3x, ROE 13.8%
- 2023(E): Revenue KRW 8.909T, Operating Profit KRW 639B, Net Profit KRW 447B, EPS KRW 5,758, BPS KRW 101,658, P/E 24.1x, P/B 1.4x, ROE 5.8%
- 2024(E): Revenue KRW 9.494T, Operating Profit KRW 798B, Net Profit KRW 614B, EPS KRW 7,914, BPS KRW 107,937, P/E 17.5x, P/B 1.3x, ROE 7.6%
- 2025(E): Revenue KRW 10.158T, Operating Profit KRW 927B, Net Profit KRW 729B, EPS KRW 9,399, BPS KRW 115,118, P/E 14.8x, P/B 1.2x, ROE 8.4%
Earnings Trajectory & Inventory Setup
- Customer component inventory remains lean, with PC and automotive component destocking entering final stages
- Earnings projected to bottom in 4Q23 and show sequential quarterly improvements through 3Q24
🚀 2. [Market Opportunities & Business Outlook]
Assessment of End-Demand Visibility
- Smartphones: Actual demand recovery in Chinese sets (HOVX) remains slow despite shipments since Oct 2023; strategic customer flagship smartphone sales are strong (+10% YoY shipment growth projected)
- PC: US wholesale PC inventories have fallen below pre-COVID levels, but Chinese production is not yet ramping up, indicating conservative end-demand views
- Automotive/EV: Pure EV component demand has slowed since 2H23
Core Catalysts for 2H24 Earnings Rebound
- Server FC-BGA: Server share within total FC-BGA revenue projected to double from 15% in 2023 to 30% in 2024, driven by AI computing chips (GPU, ASIC) supplying in 2H24
- PC Replacement Cycle: Over 60% of global PCs still run Windows 10 ahead of its 2025 end-of-support; Intel/AMD chipsets satisfying MS AI PC benchmark (>40 TOPS) rolling out across 4Q24–1H25 (PC accounts for 20% of MLCC and 50% of FC-BGA revenue)
- Automotive MLCC: Share in total MLCC sales expected to expand from 20% in 2023 to 25% in 2024; supported by solid HEV demand (MLCC content per car comparable to EVs) and rising autonomous driving SoC complexity demanding high-capacitance MLCCs
- Additional AI Growth Points: AI servers requiring ~2x MLCC volume vs. conventional servers, along with on-device AI expanding high-end MLCC requirements in smartphones
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics as a company that has passed its earnings trough in 4Q23 amid concluding customer inventory adjustments, successfully repositioning its product portfolio toward AI servers and automotive electronics heading into 2H24. Rather than focusing on the temporary lack of consumer IT momentum, the core perspective highlights the improving earnings slope driven by expanding contributions from server-tier FC-BGA substrates and high-capacitance automotive MLCCs.
To verify the execution of this investment thesis going forward, key checkpoints include monitoring whether sequential quarterly operating profit recovery continues following the 4Q23 trough, whether server FC-BGA revenue share reaches the projected 30% level as AI chip supplies ramp in 2H24, and whether automotive MLCC revenue share expands to 25% on the back of HEV and autonomous driving demand. These developments can be tracked through upcoming quarterly earnings releases, official IR 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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