Brokerage : Hana Securities
Analyst : Min-kyung Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 310,000 (Raised, 12-month Target Price)
Core Momentum : Sustained medium-to-long term earnings expansion driven by broadening data center demand, structural supply tightness in high-value MLCCs, and the commercial ramp-up of AI accelerator FCBGA substrates in 2026.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, 12-month Target Price raised to KRW 310,000 (34% upside potential), derived by applying a target P/B multiple of 2.4x (upper end of 10-year historical P/B band) to the 2026 BPS forecast of KRW 128,546.
- Base Share Price (As of Oct 29, 2025): KRW 232,000 (Market Cap: KRW 17.33 Trillion, KOSPI: 4,081.15 pt, Shares Outstanding: 74.69M, Foreign Ownership: 38.61%)
- Valuation Multiples & Trend:
- PER: 2023: 28.11x → 2024: 14.15x → 2025(E): 28.91x → 2026(E): 22.04x
- PBR: 2023: 1.49x → 2024: 1.08x → 2025(E): 1.94x → 2026(E): 1.80x
- EV/EBITDA: 2023: 7.82x → 2024: 5.87x → 2025(E): 9.79x → 2026(E): 8.70x
- ROE: 2023: 5.50% → 2024: 8.16% → 2025(E): 6.94% → 2026(E): 8.61%
- BPS: 2023: KRW 103,020 → 2024: KRW 115,152 → 2025(E): KRW 119,774 → 2026(E): KRW 128,546
- DPS: 2023: KRW 1,150 → 2024: KRW 1,800 → 2025(E): KRW 1,800 → 2026(E): KRW 1,800
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.25 Trillion, Operating Profit KRW 891.0 Billion, Net Profit KRW 622.8 Billion, EPS KRW 8,025 (Forecast beats consensus of KRW 11.11 Trillion in Revenue and KRW 841.0 Billion in Operating Profit).
- 2026(E): Revenue KRW 11.99 Trillion, Operating Profit KRW 1.08 Trillion, Net Profit KRW 816.9 Billion, EPS KRW 10,527.
- 3Q25 Results & 4Q25 Preview:
- 3Q25 Results: Revenue of KRW 2.89 Trillion (+10% YoY, +4% QoQ) and Operating Profit of KRW 260.3 Billion (+16% YoY, +22% QoQ, OPM 9.0%), beating operating profit estimates by 8% on favorable FX and strong execution in Package and Optics divisions.
- 4Q25 Outlook: Projected Revenue of KRW 2.84 Trillion (+14% YoY, -2% QoQ) and Operating Profit of KRW 217.2 Billion (+89% YoY, -17% QoQ, OPM 7.7%). Resilient earnings performance expected despite off-season timing.
🚀 2. [Market Opportunities & Business Outlook]
- 3Q25 Segment Review & Capacity Utilization:
- Component Division: Revenue reached KRW 1.38 Trillion. Capacity utilization climbed ~8%p QoQ to ~98%, driven by IT seasonality and resilient demand across industrial and automotive sectors. Rising utilization sustained despite capacity expansion and efficiency enhancements.
- Package Solution Division: Revenue reached KRW 593.2 Billion, fueled by demand for mobile AP/memory BGA substrates and general server FCBGA substrates.
- Optics & Communication Division: Revenue reached KRW 914.6 Billion, with QoQ contraction limited to -3% supported by strategic customer foldable smartphone sales and automotive camera module growth.
- 4Q25 Drivers & 2026 Growth Catalysts:
- MLCC: Sub-optimal inventory levels across the industry point to prolonged supply tightness. Higher server and automotive MLCC shipments in Q4 are expected to lift blended ASP, offsetting seasonal volume declines.
- FCBGA: General server CPU replacement cycles continue to drive sales growth in Q4. FCBGA revenue surpassed BGA in Q3, with the gap expected to widen further. Commercial deliveries for AI accelerators slated to accelerate in 2026.
- Optics & Communication: Initial shipments for strategic clients and Chinese flagship smartphones projected to drive QoQ revenue growth in Q4.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a beneficiary experiencing data-center-driven momentum across both its Component and Package Solution divisions, establishing earnings resilience against traditional off-season volatility. The perspective emphasizes sustained supply tightness in high-value MLCCs below normal inventory levels, paired with medium-to-long term structural growth in FCBGA substrates extending from legacy server replacement cycles into 2026 AI accelerator demand.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) blended ASP gains and margin defense in the Component division via automotive and server MLCC product mix improvements in Q4; 2) expanding FCBGA revenue share over BGA within the Package division supported by continuous general server CPU replacement demand; and 3) the commercial delivery ramp-up and revenue recognition of AI accelerator FCBGA substrates in 2026. These developments can be monitored through upcoming quarterly earnings announcements, official IR presentations, regulatory filings, and corporate disclosures.
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