Brokerage : iM Hi Investment & Securities
Analyst : Eui-young Koh
Investment Rating : Buy (Maintain)
Target Price : KRW 185,000 (Upward)
Core Momentum : Sequential recovery opportunities expanding from Chinese mobile sell-in competition to PC component restocking on lean inventories and on-device AI-driven high-capacitance MLCC demand
📊 1. [Valuation & Key Financial Metrics]
Target Price & Valuation Basis
- Raised Target Price from KRW 160,000 to KRW 185,000 and maintained Buy rating
- Target P/B multiple raised from the historical mid-low of 1.45x to the historical average of 1.7x
- Upside potential of 21.7% based on closing price of KRW 152,000 (Jan 4, 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 8.763T, Operating Profit KRW 648B, Net Profit KRW 449B, EPS KRW 5,788, BPS KRW 100,763, P/E 26.3x, P/B 1.5x, ROE 5.8%
- 2024(E): Revenue KRW 9.325T, Operating Profit KRW 850B, Net Profit KRW 649B, EPS KRW 8,359, BPS KRW 106,562, P/E 18.2x, P/B 1.4x, ROE 8.1%
- 2025(E): Revenue KRW 9.791T, Operating Profit KRW 1.114T, Net Profit KRW 870B, EPS KRW 11,208, BPS KRW 114,724, P/E 13.6x, P/B 1.3x, ROE 10.1%
4Q23 Earnings Forecast
- 4Q23 Revenue projected at KRW 2.100T (+10% YoY, -9% QoQ) and Operating Profit at KRW 119.2B (-23% YoY, OPM 5.5%), maintaining previous estimates
🚀 2. [Market Opportunities & Business Outlook]
Chinese Mobile Sell-in Competition
- China smartphone shipments (CAICT) grew +19% YoY in October and +22% YoY in November, significantly outpacing retail sales growth (+12% and +8% YoY)
- Market share competition following Huawei’s resurgence and flagship launches around 1Q24 are driving component orders, expected to last until the Lunar New Year
- Chinese mobile accounts for an estimated 30% of company camera module revenue and 10–15% of MLCC revenue
Potential Restocking Opportunity in PC
- US wholesale PC inventory has fallen to 2020 levels, though active restocking has not yet materialized
- Catalysts including NPU-equipped AI PC rollouts and expected Windows 12 launch in September–October 2024 could stimulate component restocking demand
- PC applications account for 20% of the company’s MLCC sales and 50% of FC-BGA substrate sales, presenting substantial operational leverage upon PC demand recovery
On-Device AI Drivers & 4Q23 Segment Mix
- On-device AI proliferation in smartphones and PCs drives supply chain investment and R&D, presenting potential demand growth for ultra-small, high-capacitance high-value MLCCs alongside broader substrate advancement trends
- In 4Q23, additional component orders from Chinese mobile clients were offset by weaker-than-expected PC and automotive demand
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics as a primary beneficiary of the MLCC industry’s mean reversion, supported by a transition to growth across the smartphone and PC markets in 2024 after two years of downturn. Beyond the near-term volume boost from Chinese smartphone sell-in competition, this perspective highlights the sequential broadening of catalysts—specifically pointing to potential PC component restocking (MLCC and FC-BGA) enabled by low wholesale inventories alongside structural demand growth for high-capacitance MLCCs driven by on-device AI adoption.
To verify the execution of this investment thesis going forward, key checkpoints include monitoring whether component order momentum in Chinese mobile sustains beyond the Lunar New Year, whether PC makers initiate actual component restocking (across MLCC and FC-BGA lines) ahead of AI PC and new OS releases, and whether demand for ultra-small, high-capacitance high-value MLCCs expands as expected. 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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