Brokerage : IBK Securities
Analyst : Un-ho Kim
Investment Rating : BUY (Maintain)
Target Price : KRW 180,000 (Maintain)
Core Momentum : Reversal to growth starting in 1Q24 following the 4Q23 seasonal trough, underpinned by component recovery and structural expansion into Non-IT applications
📊 1. [Valuation & Key Financial Metrics]
Target Price & Valuation Basis
- Maintained BUY rating with a Target Price of KRW 180,000
- Current price (Jan 31, 2024): KRW 139,600 with 2024F P/E of 11.5x, P/B of 1.2x, and Dividend Yield (2023F) of 1.4%
- 2023F EPS revised down from KRW 5,883 to KRW 5,451, while 2024F EPS was revised up from KRW 11,251 to KRW 12,135
Financial Forecast & Key Metrics (Consolidated)
- 2021: Revenue KRW 9.675T, Operating Profit KRW 1.487T, Pre-tax Profit KRW 1.491T, Net Profit (Controlling) KRW 892B, EPS KRW 11,500, OPM 15.4%, ROE 14.3%, P/E 17.2x, P/B 2.3x
- 2022: Revenue KRW 9.425T, Operating Profit KRW 1.183T, Pre-tax Profit KRW 1.187T, Net Profit (Controlling) KRW 981B, EPS KRW 12,636, OPM 12.6%, ROE 13.8%, P/E 10.3x, P/B 1.3x
- 2023(F): Revenue KRW 8.910T, Operating Profit KRW 639B, Pre-tax Profit KRW 543B, Net Profit (Controlling) KRW 423B, EPS KRW 5,451, OPM 7.2%, ROE 5.5%, P/E 28.1x, P/B 1.5x
- 2024(F): Revenue KRW 9.938T, Operating Profit KRW 1.183T, Pre-tax Profit KRW 1.287T, Net Profit (Controlling) KRW 942B, EPS KRW 12,135, OPM 11.9%, ROE 11.3%, P/E 11.5x, P/B 1.2x
- 2025(F): Revenue KRW 10.932T, Operating Profit KRW 1.115T, Pre-tax Profit KRW 1.116T, Net Profit (Controlling) KRW 812B, EPS KRW 10,463, OPM 10.2%, ROE 9.0%, P/E 13.3x, P/B 1.2x
4Q23 Results & 1Q24 Outlook
- 4Q23 Results: Revenue KRW 2.306T (-1.4% QoQ), Operating Profit KRW 110.4B (-42.3% QoQ), meeting prior expectations
- 1Q24 Outlook (E): Revenue KRW 2.392T (+3.7% QoQ), Operating Profit KRW 151.8B (+37.5% QoQ)
🚀 2. [Market Opportunities & Business Outlook]
4Q23 Segment Review
- Package substrate revenue held flat QoQ, component revenue dropped 10% QoQ, and optical solutions grew 10.5% QoQ
- Divisional operating profits declined QoQ across all segments; optical solutions experienced a mild contraction, while remaining divisions contracted by ~50%
1Q24 Outlook & Divisional Growth Drivers
- Package Substrate: 1Q24 revenue projected down 10% QoQ with subdued profitability; however, server, network, and automotive applications are expected to lead future recovery and offset consumer IT sluggishness
- Component (MLCC): 1Q24 revenue projected to increase slightly QoQ, with operating profit expected to surge over +30% QoQ; Non-IT MLCC revenue contribution continues to expand alongside new customer additions
- Optical Solutions: 1Q24 revenue expected to increase in the 10% range QoQ
- On-Device: Potential benefits anticipated from the expansion of On-Device AI
- Stable sequential growth expected to continue from 2Q24 onward, sustaining an upward quarterly earnings trajectory
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics as a company that has established an earnings bottom during the 4Q23 off-season and is transitioning into a steady quarterly recovery trajectory starting in 1Q24. Beyond near-term divisional fluctuations, this perspective emphasizes the company’s fundamental progress driven by the profit rebound in components, rising Non-IT exposure in MLCCs, and the structural portfolio shift within package substrates toward server, network, and automotive sectors.
To verify the execution of this investment thesis going forward, key checkpoints include monitoring whether the component division achieves the projected +30%+ QoQ profit growth alongside optical revenue gains in 1Q24, whether new Non-IT MLCC customer acquisitions continue, and whether server, network, and automotive demands in package substrates sufficiently mitigate legacy IT sluggishness to sustain steady growth from 2Q24 onward. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and periodic 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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