Brokerage : Eugene Investment & Securities
Analyst : Joo-hyung Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 230,000 (Raised)
Core Momentum : Entry into a pricing-driven MLCC upcycle and target price upgrade driven by industry-wide capacity cannibalization from surging AI server demand, tight industry supply, and the high probability of industrial MLCC price increases in 2026.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised from KRW 170,000 to KRW 230,000 (18.9% upside potential), derived by applying the average 12MF P/B multiple from the previous 2017–2018 MLCC upcycle.
- Base Share Price (As of Sep 30, 2025): KRW 193,500 (Market Cap: KRW 14.45 Trillion, Shares Outstanding: 74.69M, 52-Week High: KRW 209,500 / Low: KRW 105,500, 52-Week Daily Beta: 1.13, 60-Day Daily Avg Turnover: KRW 74.7 Billion, Foreign Ownership: 37.4%, Dividend Yield: 0.9%).
- Valuation Multiples & Trend:
- PER: 2023: 28.1x → 2024: 14.1x → 2025(E): 25.3x → 2026(E): 19.0x
- PBR: 2023: 1.5x → 2024: 1.1x → 2025(E): 1.6x → 2026(E): 1.5x
- EV/EBITDA: 2023: 7.7x → 2024: 5.7x → 2025(E): 8.3x → 2026(E): 6.7x
- ROE: 2023: 5.5% → 2024: 8.2% → 2025(E): 6.8% → 2026(E): 8.5%
- Earnings Forecast Summary (Post-Revision):
- 2025(E): Revenue KRW 11.13 Trillion (+8.1% YoY), Operating Profit KRW 822.0 Billion (raised from KRW 811.0 Billion, +11.8% YoY, OPM 7.4%), Pre-tax Profit KRW 755.0 Billion, Net Profit KRW 633.0 Billion, Controlling Net Profit KRW 606.0 Billion, EPS KRW 7,807.
- 2026(E): Revenue KRW 11.96 Trillion (+7.5% YoY), Operating Profit KRW 1.05 Trillion (raised from KRW 986.0 Billion, +28.1% YoY, OPM 8.8%), Pre-tax Profit KRW 996.0 Billion, Net Profit KRW 832.0 Billion, Controlling Net Profit KRW 807.0 Billion, EPS KRW 10,405 (+33.3% YoY).
- 2027(E): Revenue KRW 13.26 Trillion, Operating Profit KRW 1.27 Trillion (OPM 9.6%), Pre-tax Profit KRW 1.21 Trillion, Controlling Net Profit KRW 985.0 Billion, EPS KRW 12,693.
- 3Q25 Preview & 4Q25 Preview:
- 3Q25 Outlook: Projected Revenue of KRW 2.82 Trillion (+8% YoY, +1% QoQ) and Operating Profit of KRW 243.9 Billion (+5% YoY, +14% QoQ, OPM 8.7%), slightly beating initial estimates on favorable FX and component strength. Component division revenue projected at KRW 1.38 Trillion (+8% QoQ).
- 4Q25 Outlook: Projected Revenue of KRW 2.79 Trillion (+12% YoY, -1% QoQ) and Operating Profit of KRW 165.0 Billion (+43% YoY, -32% QoQ, OPM 5.9%).
🚀 2. [Market Opportunities & Business Outlook]
- AI Server MLCC Demand & Capacity Cannibalization:
- AI server MLCCs require significantly higher capacitance within identical form factors compared to general server products, creating process bottlenecks in dielectric layer and electrode stacking and cannibalizing overall industry MLCC capacity.
- Industrial MLCCs (AI servers, power, networking) share production facilities with IT MLCC lines.
- Disciplined Industry Additions & High Utilization:
- Major MLCC suppliers such as Murata and Taiyo Yuden are adding ~10% annual capacity; Samsung Electro-Mechanics is expanding by 10–15% annually, but additions are largely dedicated to automotive MLCC lines.
- Component division capacity utilization currently exceeds 95%. Any potential rebound in consumer IT demand would require additional IT MLCC output, contributing to faster-than-expected price increases.
- Probability of Price Hikes in 2026:
- Even without a broad recovery in consumer IT set demand, expanding rack server shipments from server ODMs support a high probability of annual price increases for industrial MLCCs in 2026.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a primary beneficiary of process bottlenecks and industry-wide capacity cannibalization triggered by surging high-capacitance AI server demand. The core perspective highlights that disciplined supply additions across global peers (10–15% focused mainly on automotive), Component capacity utilization sustained above 95%, and expanding server ODM rack server shipments indicate the early stage of a pricing-driven upcycle in industrial MLCCs for 2026, justifying the application of the average 12MF P/B multiple from the 2017–2018 upcycle.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q3 2025 Operating Profit in the KRW 240.0 Billion range (projected at KRW 243.9 Billion) to confirm earnings beat; 2) sustaining Component capacity utilization above 95% alongside ongoing capacity cannibalization from AI server and networking demand; and 3) the actual implementation of price hikes in industrial MLCC lines driven by server ODM shipment expansion, supporting 2026 annual Operating Profit of KRW 1.05 Trillion. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
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