Brokerage : Daishin Securities
Analyst : Kangho Park (RA: Jiwon Seo)
Investment Rating : BUY (Maintained)
Target Price : KRW 920,000 (Maintained)
Core Momentum : Anticipated 2Q26 additional FC-BGA investment decisions driven by 4Q26 full capacity projections (KRW 1.94 Trillion FY26 revenue), coupled with rising MLCC Book-to-Bill ratios (1.1–1.2x) paving the way for broad price hikes
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained) / 6-Month Target Price KRW 920,000 (Maintained) (Closing price KRW 832,000 as of April 30, 2026)
- Valuation Methodology: Applied historical peak Target P/E multiple of 46.4x to 2026(E) EPS of KRW 16,079
- Annual Forecast Revisions:
- 2026(E): Revenue KRW 13.307 Trillion (+4.7%), Operating Profit KRW 1.542 Trillion (+0.5%), Net Profit (Controlling) KRW 1.248 Trillion (+0.2%), EPS KRW 16,079 (+0.2%)
- 2027(E): Revenue KRW 14.317 Trillion (+3.5%), Operating Profit KRW 1.944 Trillion (+0.4%), Net Profit (Controlling) KRW 1.538 Trillion (+0.3%), EPS KRW 19,813 (+0.3%)
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2024 KRW 10.294 Trillion → 2025 KRW 11.314 Trillion → 2026(E) KRW 13.307 Trillion → 2027(E) KRW 14.317 Trillion → 2028(E) KRW 14.785 Trillion
- Operating Profit (KRW): 2024 KRW 735.0 Billion → 2025 KRW 913.0 Billion → 2026(E) KRW 1.542 Trillion (+68.8% YoY) → 2027(E) KRW 1.944 Trillion (+26.1% YoY) → 2028(E) KRW 1.993 Trillion
- Net Profit (Controlling) (KRW): 2024 KRW 679.0 Billion → 2025 KRW 706.0 Billion → 2026(E) KRW 1.248 Trillion → 2027(E) KRW 1.538 Trillion → 2028(E) KRW 1.580 Trillion
- EPS (KRW): 2024 KRW 8,752 → 2025 KRW 9,099 → 2026(E) KRW 16,079 → 2027(E) KRW 19,813 → 2028(E) KRW 20,362
- Valuation Multiples (PER / PBR / ROE):
- 2024: PER 14.1x, PBR 1.1x, ROE 8.2%
- 2025: PER 28.0x, PBR 2.1x, ROE 7.7%
- 2026(E): PER 51.4x, PBR 6.0x, ROE 12.3%
- 2027(E): PER 41.7x, PBR 5.2x, ROE 13.2%
- 2028(E): PER 40.6x, PBR 4.6x, ROE 11.9%
- Quarterly Earnings Breakdown & Outlook:
- 1Q26 Performance: Revenue KRW 3.209 Trillion (+17.2% YoY, +10.6% QoQ), Operating Profit KRW 281.0 Billion (report text cites KRW 280.6 Billion, +39.9% YoY, +17.2% QoQ). Excluding one-off retirement expenses of KRW 71.4 Billion, normalized operating profit reached KRW 352.0 Billion, significantly beating consensus of KRW 271.5 Billion.
- 2Q26 Outlook: Revenue KRW 3.258 Trillion (+17.0% YoY, +1.5% QoQ), Operating Profit KRW 383.0 Billion (report text cites KRW 382.5 Billion, +79.6% YoY, +36.3% QoQ), Net Profit KRW 307.0 Billion (+136.3% YoY, +23.0% QoQ).
🚀 2. [Market Opportunities & Business Outlook]
- FC BGA Division (Leap to #1 in AI Server/Datacenter Substrates):
- 1Q26 Momentum: 1Q FC BGA sales reached KRW 422.0 Billion (+21.6% QoQ), representing 58% of Package Solutions division revenue.
- Annual Forecast: Full-year 2026 FC BGA revenue projected at KRW 1.94 Trillion (+66.7% YoY) driven by expanding AI server/datacenter deliveries and surging ASIC order intake.
- Full Capacity & Expansion: Anticipating theoretical 100% full capacity by 4Q26, necessitating new capacity decisions in 2Q26. New capacity coming online in 2028 is expected to position SEMCO as the global #1 supplier in AI server/datacenter FC BGA substrates.
- MLCC Division (Book-to-Bill Ratio at 1.1–1.2x & Pricing Power):
- Expanding market share in AI server, datacenter, and automotive applications is intensifying structural supply tightness.
- The Book-to-Bill ratio (orders/shipments) for top-tier players (Murata and SEMCO) has expanded to 1.1–1.2x (above the expansion benchmark of 1.0), fostering conditions for contract price hikes alongside high fab utilization.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics as entering an accelerated earnings growth phase, proven by its underlying 1Q26 operating profit of KRW 352.0 Billion (adjusting for KRW 71.4 Billion in one-off retirement expenses) and a projected +79.6% YoY surge in 2Q26 operating profit to KRW 382.5 Billion. This perspective emphasizes the explosive growth in FC BGA revenue (KRW 1.94 Trillion in 2026, +66.7% YoY) demanding near-term 2Q investment commitments ahead of 4Q full utilization, as well as MLCC Book-to-Bill ratios reaching 1.1–1.2x, fully justifying the historical upper-end Target P/E multiple of 46.4x based on 2026(E) EPS.
To evaluate whether this investment thesis unfolds as anticipated, key verification checkpoints include delivering KRW 380B+ operating profit in 2Q26, formal announcements regarding new FC BGA fab investments during 2Q26 to secure 2028 market leadership, achieving 100% capacity utilization in substrate lines by 4Q26, and the translation of elevated Book-to-Bill ratios (1.1–1.2x) into realized MLCC price increases. Progress on these fronts can be tracked via upcoming quarterly earnings announcements, investor relations disclosures, and periodic regulatory filings.
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