Brokerage : Eugene Investment & Securities
Analyst : Joohyung Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 160,000 (Maintained)
Core Momentum : Expanding automotive MLCC exposure and ramping AI accelerator FC-BGA shipments to North American CSPs maintain medium-to-long-term growth trajectory despite near-term FX and IT demand headwinds.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained), Target Price maintained at KRW 160,000
- Earnings Forecast Revisions:
- 2025F Operating Profit revised down from KRW 866 Billion to KRW 800 Billion
- 2026F Operating Profit revised down from KRW 1.047 Trillion to KRW 929 Billion
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735 Billion / Net Profit KRW 703 Billion
- 2025F: Revenue KRW 10.858 Trillion / Operating Profit KRW 800 Billion / Net Profit KRW 709 Billion
- 2026F: Revenue KRW 11.796 Trillion / Operating Profit KRW 929 Billion / Net Profit KRW 825 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F):
- PER: 14.1x → 15.4x → 13.1x
- PBR: 1.1x → 1.1x → 1.0x
- EV/EBITDA: 5.7x → 5.6x → 4.7x
- ROE: 8.2% → 7.5% → 8.3%
- EPS: KRW 8,752 → KRW 8,794 → KRW 10,313
- 2Q25 Quarterly Earnings Forecast (Preview):
- Projected Revenue of KRW 2.694 Trillion (YoY +4%, QoQ -2%), Operating Profit of KRW 202.4 Billion (YoY -3%, QoQ +1%, OPM 7.5%).
- Downward revision in quarterly estimates is primarily driven by sharp foreign exchange rate fluctuations, whereas core growth direction in automotive and server domains remains intact.
🚀 2. [Market Opportunities & Business Outlook]
- Component (MLCC) & End-Market Trends:
- Limited smartphone demand uplift from China’s trade-in subsidies, and PC demand was largely pulled forward ahead of tariff implementations.
- Despite potential near-term EV demand moderation in China, automotive MLCC revenue share continues to expand, underpinned by market share gains at key client Account B.
- Package Substrates (FC-BGA) & AI Accelerator Shipments:
- Meaningful revenue recognition for AI accelerator substrates dedicated to North American Cloud Service Providers (CSPs) starts in 2Q25.
- These AI accelerator substrates are projected to account for a high-single-digit percentage of annual FC-BGA revenue.
- Favorable capacity availability relative to competitors positions the company to actively participate in future custom ASIC market growth.
- Progress in Next-Generation Growth Engines:
- While broader 2H25 consumer IT demand expectations remain muted, new business initiatives including AI accelerator FC-BGA substrates, silicon capacitors, and glass substrates continue on schedule.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a cyclical vendor shaken by FX swings and near-term consumer smartphone/PC sluggishness, but as an advanced electronic component enterprise sustaining a resilient upward structural trajectory via high-value automotive MLCCs and AI infrastructure substrates. Greater emphasis is placed on the strategic ramp-up of AI accelerator FC-BGA substrates for North American CSPs and mid-to-long term optionality from silicon capacitors and glass substrates rather than short-term end-market macro noise.
To verify whether this investment thesis materializes going forward, investors should monitor whether AI accelerator FC-BGA shipments to North American CSPs ramp up smoothly starting in 2Q25 to reach a high-single-digit share of total FC-BGA sales, whether automotive MLCC revenue share continues to expand through client market share gains despite Chinese EV softness, and whether next-generation technologies—such as silicon capacitors and glass substrates—progress as scheduled toward commercial scale. These developments can be tracked through upcoming quarterly earnings releases, official IR materials, and regulatory filings.
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