Brokerage : Hana Securities
Analyst : Min-kyung Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 310,000 (Maintained)
Core Momentum : Upside earnings potential projected on the back of AI server MLCC demand outgrowing server shipment growth due to higher GPU content per rack/rising TDP, 2H26 FCBGA full capacity utilization on new customer wins, and strategic internalization of AI initiatives (Alva Industries, EXTOOL, Sumitomo JV)
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; 12-month Target Price maintained at KRW 310,000 (vs. current price of KRW 253,500).
- 4Q25 Earnings Forecast (Preview):
- Revenue: KRW 2.8469 Trillion (+14.2% YoY, -1.5% QoQ).
- Operating Profit: KRW 225.8 Billion (+96.3% YoY, -13.3% QoQ, OPM 7.9%).
- Key Drivers: Favorable USD/KRW FX tailwinds, cross-divisional yield improvements, slight sequential Blended ASP gains due to lower IT MLCC share alongside 90%+ utilization (inventory at ~4 weeks), and sequential growth in total package substrate revenue driven by expanding server FCBGA shipments.
- Annual Financial Projections (2025F – 2026F):
- 2025F: Revenue KRW 11.2591 Trillion / Operating Profit KRW 899.6 Billion / Net Profit KRW 675.6 Billion
- 2026F: Revenue KRW 12.9985 Trillion (text mentions KRW 12.9988 Trillion, +15.5% YoY) / Operating Profit KRW 1.2435 Trillion (text mentions KRW 1.2436 Trillion, +38.2% YoY, OPM 9.6%) / Pre-tax Profit KRW 1.2325 Trillion / Net Profit KRW 1.0019 Trillion
- Key Financial Multiples (2026F):
- EPS: KRW 12,911 (+48.28% YoY)
- P/E: 19.48x / P/B: 1.88x
- ROE: 10.21% / EV/EBITDA: 9.08x
- BPS: KRW 133,881 / DPS: KRW 1,800
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC):
- In 4Q25, narrowing price declines and a reduced consumer IT mix are projected to drive modest sequential gains in Blended ASP, maintaining capacity utilization above 90%.
- While 2026 AI server shipments are projected to grow +16% YoY, MLCC demand growth is estimated to significantly exceed unit shipment growth due to increased GPU content per rack and rising server TDP.
- Driven by AI server and automotive demand, annual MLCC capacity utilization is projected to remain above 90% throughout 2026.
- Package Solution Division (FCBGA & BGA):
- In 4Q25, expanding server FCBGA shipments offset seasonal mobile BGA softness, supporting sequential growth in total package substrate revenue.
- Securing new customer accounts is expected to sustain full capacity utilization from 2H26 onward.
- Fixed-cost dilution from higher utilization and product mix optimization are projected to accelerate profitability gains in the second half of 2026.
- Optics Division & New Strategic Initiatives:
- Commercial supply ramp-up of camera modules for humanoid robotics serves as a potential growth catalyst despite broader mobile demand concerns.
- Pursuing pitch-fine coil supply for a new North American mobile customer to drive client diversification.
- Internalizing AI-related new business technologies: strategic investments in Alva Industries (fiber printing-based coreless motors) and EXTOOL (glass substrate plating technology), alongside establishing a joint venture (JV) with Sumitomo of Japan.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional components vendor vulnerable to consumer mobile seasonality, but as a high-operating-leverage AI hardware platform provider capturing outsized demand growth from AI server rack architecture sophistication (higher GPU density and TDP) and expanding tier-1 FCBGA customer accounts. Rather than focusing on mobile off-peak seasonality, the analytical thesis places greater strategic significance on MLCC demand outpacing AI server unit growth (+16%), FCBGA lines reaching full capacity in 2H26, and preemptive technology internalization across glass substrates (EXTOOL), robotics actuators (Alva Industries), and materials (Sumitomo JV).
To assess whether this investment thesis continues to materialize, key tracking points include the expansion of high-value MLCC Blended ASP driven by rack-scale server adoption, FCBGA achieving full capacity utilization in 2H26 on new customer allocations, progress in commercializing AI new business technologies (glass substrates and robotics components), and achieving the projected 2026 annual operating profit (KRW 1.24 Trillion). These variables can be verified through upcoming quarterly earnings releases, official company IR presentations, periodic regulatory filings (quarterly and annual reports), and DART disclosures.
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