Brokerage : iM Hi Investment & Securities
Analyst : Eui-young Koh
Investment Rating : Buy (Maintain)
Target Price : KRW 185,000 (Maintain)
Core Momentum : Structural growth driven by component spec upgrades in on-device AI, AI servers, and automotive electronics amid MLCC industry mean reversion
📊 1. [Valuation & Key Financial Metrics]
Target Price & Valuation Basis
- Maintained Buy rating with a Target Price of KRW 185,000
- Upside potential of 32.5% based on closing price of KRW 139,600 (Jan 31, 2024)
Financial Forecast & Key Metrics (K-IFRS Consolidated)
- 2022: Revenue KRW 9.425T, Operating Profit KRW 1.183T, Net Profit KRW 981B, EPS KRW 12,636, BPS KRW 97,145, P/E 10.3x, P/B 1.3x, ROE 13.8%
- 2023(E): Revenue KRW 8.909T, Operating Profit KRW 639B, Net Profit KRW 447B, EPS KRW 5,758, BPS KRW 101,658, P/E 24.2x, P/B 1.4x, ROE 5.8%
- 2024(E): Revenue KRW 9.494T, Operating Profit KRW 798B, Net Profit KRW 614B, EPS KRW 7,914, BPS KRW 107,937, P/E 17.6x, P/B 1.3x, ROE 7.6%
- 2025(E): Revenue KRW 10.158T, Operating Profit KRW 927B, Net Profit KRW 729B, EPS KRW 9,399, BPS KRW 115,118, P/E 14.9x, P/B 1.2x, ROE 8.4%
4Q23 Results Review & 1Q24 Outlook Revisions
- 4Q23 Results: Revenue KRW 2.300T (+17% YoY, -2% QoQ), Operating Profit KRW 110.4B (+9% YoY, OPM 4.8%), in line with market consensus
- 1Q24 Outlook (E): Revenue KRW 2.400T (+17% YoY, +3% QoQ), Operating Profit KRW 165.0B (+18% YoY, OPM 7.0%), revised by +5% and -12% respectively vs. previous estimates (camera modules upgraded, MLCC downgraded)
🚀 2. [Market Opportunities & Business Outlook]
Component Spec Upgrades in AI & Automotive
- Mobile: Expanding on-device AI (AI smartphones, AI PCs) driving demand for miniature, high-capacitance MLCCs
- AI Servers & Automotive (ADAS): Structural growth in high-capacitance, high-reliability MLCCs and FC-BGA substrates
End-Market Environment & Segment Dynamics
- Chinese & Strategic Customers: Shipment competition among Chinese peers (OVX) entered a lull due to rising channel inventory, with potential re-acceleration post-Lunar New Year; initial positive market response for strategic customer flagships offers upside potential via possible production increases
- AI PC Restocking Potential: PCs account for 15–20% of MLCC and 40–50% of FC-BGA sales; replacement cycles for laptops purchased during COVID-19 and upcoming AI-optimized OS launches serve as potential demand catalysts
- Automotive MLCC Outlook: Near-term growth slope moderated by broader EV softness, but per-vehicle content growth remains intact. Automotive MLCC revenue estimated at KRW 720.0B (+22% YoY) in 2023, projected to reach KRW 861.0B in 2024 (22.5% of MLCC sales) and KRW 1.000T in 2025 (24.3% of MLCC sales); restocking demand expected in 2H24 as client destocking concludes
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics as a company positioned to benefit from component spec upgrades across on-device AI, AI servers, and ADAS as the broader MLCC cycle reverts to its historical mean following two years of boom and two years of downturn. Rather than being constrained by near-term EV softness and subdued PC output, this perspective emphasizes the medium-term inflection driven by concluding customer inventory adjustments and rising content per device across AI-enabled hardware.
To verify the execution of this investment thesis going forward, key checkpoints include monitoring whether customer restocking materializes in the PC and automotive segments in 2H24, whether potential production increases for strategic flagship smartphones materialize, and whether automotive MLCC revenue achieves the projected trajectory (KRW 861.0B and a 22.5% mix in 2024). 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.
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