Brokerage : IBK Securities
Analyst : Woon-ho Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 270,000 (Raised)
Core Momentum : Earnings growth visibility and target price upgrade for 2026 underpinned by muted Q4 seasonal adjustments driven by AI demand, rising Non-IT MLCC share, and product mix migration toward server/automotive substrates.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised by 8.0% from KRW 250,000 to KRW 270,000.
- Base Share Price (As of Oct 29, 2025): KRW 232,000 (Market Cap: KRW 17.63 Trillion, KOSPI: 4,081.15 pt, Shares Outstanding: 77.60M, Face Value: KRW 5,000, Foreign Ownership: 38.6%, Dividend Yield: 1.1%).
- Valuation Multiples & Trend:
- PER: 2024: 14.1x → 2025(E): 24.8x → 2026(E): 20.2x → 2027(E): 21.6x
- PBR: 2024: 1.1x → 2025(E): 1.9x → 2026(E): 1.8x → 2027(E): 1.7x
- EV/EBITDA: 2024: 5.9x → 2025(E): 9.5x → 2026(E): 8.2x → 2027(E): 8.0x
- ROE: 2024: 8.2% → 2025(E): 8.0% → 2026(E): 9.3% → 2027(E): 8.1%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.20 Trillion, Operating Profit KRW 890.0 Billion (OPM 7.9%), Pre-tax Profit KRW 932.0 Billion, Net Profit (Controlling) KRW 725.0 Billion, EPS KRW 9,344 (+6.8% YoY).
- 2026(E): Revenue KRW 12.10 Trillion, Operating Profit KRW 1.14 Trillion (OPM 9.4%), Pre-tax Profit KRW 1.22 Trillion, Net Profit (Controlling) KRW 891.0 Billion, EPS KRW 11,481 (+22.9% YoY).
- 2027(E): Revenue KRW 13.05 Trillion, Operating Profit KRW 1.14 Trillion (OPM 8.8%), Pre-tax Profit KRW 1.15 Trillion, Net Profit (Controlling) KRW 834.0 Billion, EPS KRW 10,747.
- 3Q25 Review & 4Q25 Preview:
- 3Q25 Results: Revenue of KRW 2.89 Trillion (+2.8% QoQ) and Operating Profit of KRW 260.3 Billion (+22.2% QoQ), meeting market expectations. Profit growth was led primarily by the Component division.
- 4Q25 Outlook: Projected Revenue of KRW 2.79 Trillion (-3.6% QoQ) and Operating Profit of KRW 215.8 Billion (-17.1% QoQ). While profitability is expected to soften due to seasonality, the magnitude of the adjustment is narrower than previously expected thanks to AI demand and cost improvements.
🚀 2. [Market Opportunities & Business Outlook]
- 3Q25 Divisional Performance Highlights:
- Component Division: Revenue grew 5.2% QoQ, driving company-wide profit growth.
- Package Solution Division: Revenue grew 5.1% QoQ, continuing steady performance.
- Optics & Communication Division: Revenue declined 2.6% QoQ, but profitability improved due to cost reduction efforts.
- 4Q25 Environment & 2026 Catalysts:
- 4Q25 Dynamics: Revenue across non-package divisions projected to decline (Optics -3.2% QoQ, Component -5.2% QoQ) alongside margin contraction in Package and Component; however, Optics profitability is expected to hold steady with Q3 levels on cost improvements.
- MLCC: The Non-IT revenue share continues to rise, securing stable mid-to-long term growth drivers backed by new customer wins.
- Package Substrates: Product mix shifting from mobile and PC toward server and automotive applications, supporting structural profitability improvements.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a company dampening traditional Q4 off-season volatility via AI-driven demand while enhancing 2026 earnings visibility through product mix shifts toward automotive and server applications. The core perspective emphasizes the structural growth foundation built upon the rising Non-IT MLCC share, new customer onboarding, and the strategic migration of package substrate exposure from mobile/PC to server/automotive segments.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q4 2025 Operating Profit in the KRW 210.0 Billion range (projected at KRW 215.8 Billion) to confirm mitigated off-season adjustments; 2) continuous expansion in Non-IT MLCC revenue contribution along with volume delivery to new clients; and 3) migration of package substrate product mix toward server/automotive applications, driving 2026 Operating Profit to the KRW 1.1 Trillion level (projected at KRW 1.14 Trillion). These developments can be monitored through upcoming quarterly earnings announcements, official IR materials, regulatory filings, and corporate disclosures.
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