Brokerage : iM Securities
Analyst : Euiyoung Ko, Useong Son
Investment Rating : Buy (Maintained)
Target Price : KRW 180,000 (Maintained)
Core Momentum : Expanding automotive MLCC demand driven by Chinese EV NOA adoption and the commercial ramp of custom ASIC substrates for Big Tech drive structural margin improvement and valuation appeal despite tariff headwinds.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Buy (Maintained), 12-Month Target Price maintained at KRW 180,000
- Valuation Methodology: Applied a 10-year historical average P/B multiple of 1.5x while lowering 2025F and 2026F EPS forecasts by -10% and -8%, respectively
- Valuation Status: Trading at a trailing P/B of 1.04x, representing historical bottom levels outside of the 2015 restructuring and 2016 Galaxy Note 7 events
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735 Billion / Net Profit KRW 679 Billion
- 2025F: Revenue KRW 11.044 Trillion / Operating Profit KRW 863 Billion / Net Profit KRW 662 Billion
- 2026F: Revenue KRW 11.865 Trillion / Operating Profit KRW 1.036 Trillion / Net Profit KRW 819 Billion
- 2027F: Revenue KRW 12.577 Trillion / Operating Profit KRW 1.168 Trillion / Net Profit KRW 954 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F → 2027F):
- PER: 14.1x → 14.3x → 11.5x → 9.9x
- PBR: 1.1x → 1.0x → 0.9x → 0.8x
- EV/EBITDA: 5.7x → 4.4x → 3.7x → 3.1x
- ROE: 8.2% → 7.3% → 8.3% → 8.9%
- EPS: KRW 8,752 → KRW 8,533 → KRW 10,556 → KRW 12,293
- BPS: KRW 113,261 → KRW 121,946 → KRW 132,314 → KRW 144,419
- Quarterly Performance & Outlook:
- 1Q25 Review: Revenue KRW 2.73 Trillion (YoY +5%, QoQ +10%), Operating Profit KRW 200.5 Billion (YoY +9%, OPM 7.3%), in line with market consensus.
- 2Q25 Preview: Projected Revenue of KRW 2.77 Trillion (YoY +7%, QoQ +1%), Operating Profit of KRW 220.0 Billion (YoY +6%, OPM 7.9%). Operating profit estimate lowered by 10% on macro considerations.
🚀 2. [Market Opportunities & Business Outlook]
- Component (MLCC) Structural Expansion in Automotive & Industrial Segments:
- 1Q25 MLCC revenue share: Automotive expanded to 27% (YoY +5%p) and industrial reached 17% (YoY +2%p).
- 1Q25 capacity utilization reached 85% (surpassing the planned low-80% level), with inventory contracting to 4 weeks (down 1 week from 4Q24).
- Automotive MLCC revenue is projected to reach KRW 1.2 Trillion in 2025 (27% share) and KRW 1.4 Trillion in 2026 (29% share) driven by Navigate On Autopilot (NOA) penetration in Chinese EVs.
- Automotive MLCC market share estimated at 20% in 2024 (+7%p vs. 2022).
- 2Q25 Component revenue forecast to rise +6% QoQ (shipments +4% QoQ, ASP +2% QoQ, utilization ~88%).
- Package Substrates (FC-BGA) Growing Server & ASIC Presence:
- Server share within FC-BGA rose significantly to 35% in 1Q25 (YoY +13%p).
- Initial revenue recognized for Big Tech custom ASIC substrates, with mass production for additional Big Tech accounts expected between 2H25 and 2026.
- Optics Solutions Mix Shift:
- Automotive camera share within the optics division projected to expand to 20% in 2Q25 (YoY +5%p, up from 12% in 1Q25) backed by new client model mass production.
- Macro Dynamics & Supply Chain Health:
- While pre-tariff pull-in demand clouds 2H25 consumer IT set visibility, channel inventories across major MLCC players remain lean.
- China’s trade-in subsidies and upcoming 6.18 promotional catalysts continue to support communication device consumption.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a consumer mobile component maker trapped by tariff uncertainties and end-market IT demand concerns, but as an advanced electronics player fundamentally upgrading its earnings quality through expanding exposure to Chinese EV autonomous driving (NOA) and Big Tech custom ASIC substrates. Greater significance is attached to the widening disconnect between improved fundamentals and the current trailing P/B of 1.04x—which hovers near historical crisis lows—rather than near-term macroeconomic adjustments.
To verify whether this investment thesis materializes going forward, investors should monitor whether 2Q25 MLCC capacity utilization advances to 88% with concurrent gains in shipment volume and pricing, whether automotive MLCC revenue achieves the projected targets of KRW 1.2 Trillion in 2025 and KRW 1.4 Trillion in 2026, and whether commercial ASIC substrate shipments to additional Tier-1 Big Tech accounts scale successfully through 2H25 and 2026. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and 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.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
