Brokerage : iM Hi Investment & Securities
Analyst : Eui-young Koh
Investment Rating : BUY (Maintain)
Target Price : KRW 185,000 (Maintain)
Core Momentum : Earnings recovery driven by generative AI expansion increasing MLCC capacitance/content per set alongside gradual utilization rate improvement
📊 1. [Valuation & Key Financial Metrics]
Target Price & Valuation Basis
- Target Price of KRW 185,000 derived from historical average P/B of 1.7x
- Upside potential of 27.4% based on closing price of KRW 145,200 (March 18, 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: Revenue KRW 8.909T, Operating Profit KRW 639B, Net Profit KRW 423B, EPS KRW 5,450, BPS KRW 101,129, P/E 26.6x, P/B 1.4x, ROE 5.5%
- 2024(E): Revenue KRW 9.644T, Operating Profit KRW 835B, Net Profit KRW 635B, EPS KRW 8,181, BPS KRW 108,450, P/E 17.7x, P/B 1.3x, ROE 7.8%
- 2025(E): Revenue KRW 10.320T, Operating Profit KRW 966B, Net Profit KRW 749B, EPS KRW 9,654, BPS KRW 116,754, P/E 15.0x, P/B 1.2x, ROE 8.6%
Short-term Earnings Forecast Revisions (1Q24 & FY2024E)
- 1Q24(E): Revenue KRW 2.400T (+18% YoY, +4% QoQ), Operating Profit KRW 174.9B (+25% YoY, OPM 7.3%), revised upward by +1% and +6% vs. previous estimates
- FY2024 Operating Profit(E): Adjusted upward by +5% from KRW 798.0B to KRW 823.4B
🚀 2. [Market Opportunities & Business Outlook]
Generative AI Expansion Driving Higher Capacitance & Component Content
- AI Smartphones: Required capacitance increases by +10% or more compared to conventional smartphones
- AI PCs (2H24 full launch): Expected capacitance increase to surpass that of smartphones
- AI Servers: Requires ~15,000 MLCCs (based on 8 accelerators), roughly 2.5x more than conventional servers (~5,000 MLCCs vs. smartphone ~1,000, PC ~800)
- FC-BGA: Server revenue portion projected to rise from 15% in 2023 to 30% in 2024, driven by AI computing chips (ASICs, GPUs)
MLCC Utilization Rate Recovery & Demand Dynamics
- MLCC utilization trajectory: 4Q23 bottom at 75% → 1Q24E 78% → 2Q24E 81% → 3Q24E 85%
- 1Q24 MLCC shipment growth revised to +3% QoQ (vs. previous Flat estimate)
- Ceramic capacitor trade flows in China and Japan show steady recovery after bottoming in early 2023
- EV inventory adjustment impact confirmed bottom in December 2023, with current restocking demand emerging from mobile in addition to solid industrial/automotive orders
Potential 2H24 PC Demand Inflection
- PC exposure accounts for 15–20% of MLCC and 40–50% of FC-BGA revenue; while active restocking is not yet observed, potential replacement cycles tied to Windows 10 end-of-support (Oct 2025) and 2H24 MS Windows 11 AI PC updates represent key upside catalysts
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a cyclical component maker exiting an IT inventory correction, but as a core component beneficiary structurally leveraging generative AI hardware demanding significantly higher capacitance and content per device. This perspective emphasizes a qualitative improvement in product mix and utilization rates driven by high-value AI infrastructure and on-device AI proliferation rather than a simple volume rebound in general IT sets.
To verify the execution of this investment thesis going forward, key checkpoints include monitoring whether quarterly MLCC utilization rates progress along the expected trajectory (recovering from high-70s to mid-80s percentile) and whether 2H24 on-device AI deployments and expanding server-tier FC-BGA share (~30%) tangibly translate into expanded operating margins. 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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