Brokerage : iM Securities
Analyst : Eui-young Ko, RA: Woo-sung Son
Investment Rating : Buy (Maintain)
Target Price : KRW 180,000 (Maintained, 12M Target Price)
Core Momentum : Positioned for an earnings turnaround from deep value levels (12M trailing P/B 1.1x) driven by expanding mix in automotive/industrial MLCCs, server FC-BGA ramp-up, and On-Device AI hardware proliferation.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Buy (Maintain) / KRW 180,000 (Maintained, keeping target price unchanged while slightly adjusting 2024F/2025F EPS by -1.9% and -0.3%)
- Current Share Price (As of Oct 29, 2024): KRW 120,200 (Upside potential: 49.8%)
- Market Capitalization: KRW 8.98T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024E KRW 10.20T → 2025E KRW 10.90T → 2026E KRW 11.56T
- Operating Profit: 2023A KRW 639.0B → 2024E KRW 771.0B (OPM 7.6%) → 2025E KRW 938.0B (OPM 8.6%) → 2026E KRW 1.11T (OPM 9.6%)
- Net Profit: 2023A KRW 423.0B → 2024E KRW 585.0B → 2025E KRW 725.0B → 2026E KRW 869.0B
- EPS: 2023A KRW 5,450 → 2024E KRW 7,538 → 2025E KRW 9,342 → 2026E KRW 11,204
- PER: 2023A 28.1x → 2024E 15.9x → 2025E 12.9x → 2026E 10.7x
- PBR: 2023A 1.5x → 2024E 1.1x → 2025E 1.0x → 2026E 1.0x
- ROE: 2023A 5.5% → 2024E 7.2% → 2025E 8.4% → 2026E 9.3%
- Dividend Yield: 2023A 0.8% → 2024E 1.3% → 2025E 1.6% → 2026E 1.9%
- 3Q24 Earnings Review: Consolidated Revenue of KRW 2.60T (+11% YoY, +2% QoQ), Operating Profit of KRW 224.9B (+20% YoY, OPM 8.6%), matching lowered consensus. While MLCC volume was flat QoQ, ASP rose +5% QoQ on mix improvement. Substrate division continued fast-paced improvement driven by FC-BGA.
- 4Q24 Earnings Forecast: Projected Revenue of KRW 2.40T (+3% YoY, -9% QoQ), Operating Profit of KRW 157.7B (+43% YoY, OPM 6.6%), revised down by -8% from previous internal estimates. However, structural mix expansion in server and automotive products remains intact despite seasonal IT destocking.
🚀 2. [Market Opportunities & Business Outlook]
- Deep Value Valuation: Stock de-rating to a 12-month trailing P/B of 1.1x (-1SD vs. 10-year historical average) indicates that concerns regarding Samsung Electronics exposure (30% of 1H24 revenue), sluggish IT recovery, and Chinese MLCC expansion are largely reflected in the current valuation.
- Component Division (MLCC): 3Q24 industrial/automotive MLCC revenue surged +29% YoY to KRW 460.0B (IT MLCC was flat at KRW 639.0B). High-capacitance micro-MLCC content is set to expand in 2025 driven by AP/DRAM upgrades and On-Device AI proliferation (e.g., Apple Intelligence full rollout).
- Package Substrates (FC-BGA): 3Q24 server mix reached 31% (+11%p YoY) while PC mix declined to 35% (-10%p YoY). Server exposure within substrates is projected to expand from 29% in 2024 to 37% in 2025 as AI substrate mass production commences.
- Optics & Communication Solutions: Full-year 2024 automotive camera module revenue is forecast to grow +38% YoY to KRW 605.3B, increasing its revenue contribution by +3%p to 16.3% of the division.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not through the lens of transient IT demand headwinds and legacy customer exposure, but as an advanced electronics hardware manufacturer entering deep-value territory at a 12-month trailing P/B of 1.1x (-1SD vs. 10-year average). The investment thesis highlights that market headwinds are largely reflected in the current valuation, placing greater weight on the rapid mix expansion in industrial/automotive MLCCs (+29% YoY in 3Q24), the rise of server FC-BGA mix toward 37% in 2025, and structural content growth from On-Device AI hardware deployment.
To evaluate whether this thesis progresses as projected, key tracking points include achieving the 2025 full-year operating profit projection (KRW 938.0B), expanding the substrate division’s server revenue mix to 37% in 2025, sustaining strong growth in automotive camera modules (>KRW 600B in 2024), and verifying concurrent P and Q expansion in high-capacitance MLCCs driven by next-generation On-Device AI devices. These factors can be monitored through upcoming quarterly financial announcements, official company IR releases, 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.
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