Brokerage : Eugene Investment & Securities
Analyst : Joohyung Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 170,000 (Raised)
Core Momentum : Expanding high-value industrial MLCC shipments for AI servers/networking and rising FC-BGA revenue share drive structural profitability gains despite broader IT set demand headwinds.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained), Target Price raised to KRW 170,000 (from KRW 160,000)
- Valuation Methodology: Applied based on 12-month forward (12MF) earnings forecasts by business division
- Earnings Forecast Revisions:
- 2025F Operating Profit revised up from KRW 800 Billion to KRW 811 Billion
- 2026F Operating Profit revised up from KRW 929 Billion to KRW 986 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 11.100 Trillion / Operating Profit KRW 811 Billion / Net Profit KRW 634 Billion
- 2026F: Revenue KRW 12.101 Trillion / Operating Profit KRW 986 Billion / Net Profit KRW 811 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F):
- PER: 14.1x → 19.0x → 14.7x
- PBR: 1.1x → 1.2x → 1.1x
- EV/EBITDA: 5.7x → 6.2x → 5.2x
- ROE: 8.2% → 6.7% → 8.2%
- EPS: KRW 8,752 → KRW 7,814 → KRW 10,137
- Quarterly Performance & Outlook:
- 2Q25 Review: Revenue KRW 2.785 Trillion (YoY +8%, QoQ +2%), Operating Profit KRW 213 Billion (YoY +1%, QoQ +6%, OPM 7.6%), slightly exceeding brokerage forecasts.
- 3Q25 Preview: Projected Revenue of KRW 2.813 Trillion (YoY +8%, QoQ +1%), Operating Profit of KRW 229.6 Billion (YoY -1%, QoQ +8%, OPM 8.2%).
🚀 2. [Market Opportunities & Business Outlook]
- Component (MLCC) High-Value Mix Expansion:
- Despite subdued consumer IT set demand, high-value industrial MLCC revenue for AI servers and networking surged over 20% QoQ, driving component division growth.
- 2Q25 recorded concurrent QoQ increases in both ASP and shipment volume, while inventory indicators remained favorable.
- Automotive MLCC revenue share expanded QoQ supported by increased sales to existing accounts despite broader EV market deceleration in China.
- Industrial MLCC growth is projected to continue in 2H25 backed by AI server and networking demand.
- Package Solution (FC-BGA) Mix Improvement & Depreciating Cost Relief:
- Notable QoQ increase in revenue contribution from high-value FC-BGA substrates dedicated to AI servers and networking.
- Depreciation cost burdens from the new Vietnam manufacturing site are projected to peak out in 2025, paving the way for sustained margin expansion.
- High likelihood of securing additional prominent global Big Tech accounts within the next 1–2 years.
- Non-IT Structural Shift Countering Macro/Tariff Headwinds:
- While consumer durable goods may face tariff pressures in 2H25, solid Non-IT revenue contributions across automotive and server segments coupled with high-value product mix improvements are expected to sustain resilient annual performance.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a cyclical IT hardware vendor vulnerable to set demand slowdowns and tariff volatility, but as an advanced electronic component enterprise building resilient earnings power through portfolio transition toward Non-IT segments such as AI servers and automotive electronics. Greater significance is attached to the rapid expansion of industrial MLCCs and structural profitability improvements in package substrates rather than sluggish consumer end-markets.
To verify whether this investment thesis materializes going forward, investors should monitor whether the revenue contribution from industrial and automotive MLCCs continues to expand in 2H25 despite softer consumer IT markets, whether package substrate margins improve as Vietnam plant depreciation costs peak out, and whether the company formally secures additional Tier-1 global Big Tech accounts for its package solution division over the next 1–2 years. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
📢 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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