Brokerage : SK Securities
Analyst : Hyoung-wou Park, Min-gyu Kwon
Investment Rating : BUY (Maintain)
Target Price : KRW 182,000 (Upward)
Core Momentum : Disciplined inventory control defending near-term uncertainty, with steady earnings recovery direction supported by high-end MLCCs and automotive components
📊 1. [Valuation & Key Financial Metrics]
Target Price & Valuation Basis
- Maintained BUY rating and raised Target Price to KRW 182,000
- Target Price derived by applying a 6-year historical average P/B of 1.68x to 2024F BPS
- Upside potential of 30.4% based on closing price of KRW 139,600 (Jan 31, 2024)
Financial Forecast & Key Metrics (Consolidated)
- 2020: Revenue KRW 7.753T, Operating Profit KRW 913B, Net Profit (Controlling) KRW 604B, EPS KRW 8,563, P/E 20.8x, P/B 2.3x, ROE 10.9%
- 2021: Revenue KRW 9.675T, Operating Profit KRW 1.487T, Net Profit (Controlling) KRW 892B, EPS KRW 13,591, P/E 14.5x, P/B 2.2x, ROE 14.3%
- 2022: Revenue KRW 9.425T, Operating Profit KRW 1.183T, Net Profit (Controlling) KRW 981B, EPS KRW 13,012, P/E 10.0x, P/B 1.3x, ROE 13.8%
- 2023(E): Revenue KRW 8.909T, Operating Profit KRW 639B, Net Profit (Controlling) KRW 422B, EPS KRW 5,512, P/E 27.8x, P/B 1.5x, ROE 5.5%
- 2024(E): Revenue KRW 9.563T, Operating Profit KRW 836B, Net Profit (Controlling) KRW 502B, EPS KRW 6,473, P/E 21.6x, P/B 1.3x, ROE 6.2%
- 2025(E): Revenue KRW 10.178T, Operating Profit KRW 1.201T, Net Profit (Controlling) KRW 738B, EPS KRW 9,507, P/E 14.7x, P/B 1.2x, ROE 8.6%
4Q23 Review & 1Q24 Outlook
- 4Q23 Results: Operating profit of KRW 110.4B (+9% YoY), meeting lowered market consensus (KRW 110.4B)
- 1Q24 Outlook (E): Operating profit estimated at KRW 147.4B (+5% YoY) vs. consensus of KRW 179.8B
🚀 2. [Market Opportunities & Business Outlook]
4Q23 Business Environment & Utilization Management
- Met consensus despite end-market sluggishness, supported by early flagship smartphone component shipments and steady Chinese smartphone orders
- MLCC shipments estimated to decrease by 9% with prices down 2% (automotive MLCC share slipped slightly to 20% of MLCC sales)
- Utilization cuts since 3Q23 normalized inventory turnover to healthy, tight levels
1Q24 Segment Outlook & Demand Drivers
- End-set unit sales recovery remains modest with 1Q24 demand expected to track flat QoQ
- Automotive Components: Demand expected to recover modestly compared to the prior quarter
- Optical Solutions: Chinese smartphone makers accelerating adoption of folded zoom cameras
- MLCC: Shipments to grow centered on high-end lines, assuming flat QoQ volume with blended ASP increasing by +4%
- Package Substrate (FC-BGA): Subdued conditions continue in line with broader substrate industry dynamics
- Demand Visibility: Sharp demand rebounds across mobile/China are yet to be observed outside PC, placing the timing of a steeper demand inflection at 2Q24 or later
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics as a company that has protected its earnings baseline through proactive inventory adjustments and high-end product readiness, maintaining a solid recovery direction despite modest near-term demand clarity. Rather than relying on an immediate demand surge in end-market sets, the perspective focuses on the structural significance of normalized inventory days alongside higher high-end MLCC shipments and the projected improvement in MLCC pricing.
To verify the execution of this investment thesis going forward, key checkpoints include assessing whether the projected shipment growth in high-end product lines and overall MLCC price increase (+4%) materialize in 1Q24, whether folded zoom camera adoption in China and automotive component demand sustain their recovery, and whether broader end-set demand beyond PCs shows steeper inflection signals from 2Q24 onward. 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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