Brokerage : iM Securities
Analyst : Eui-young Ko (IT RA: Jeongha Park)
Investment Rating : Buy (Maintained)
Target Price : KRW 3,000,000 (Raised)
Core Momentum : Structural business transformation from Just-in-Time commodities to LTA-based specialty components and multi-year valuation re-rating driven by severe AI server capacity cannibalization
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Buy (Maintained) / Target Price KRW 3,000,000 (Raised by +30% from KRW 2,300,000) (Closing price KRW 2,184,000 as of June 30, 2026; upside potential 37.4%)
- Valuation Methodology: Applied a +30% premium to 2027 global peer average P/E multiples (Component 88x vs. peer 68x; Package 53x vs. peer 40x). 2027(E) PEG stands at 0.5x, representing an undervalued profile against the global peer average of 2.1x.
- Operating Profit Forecast Upgrades:
- 2026–2028 operating profit estimates revised upward by 6–13% (KRW 1.7 Trillion in 2026 → KRW 3.6 Trillion in 2027 → KRW 4.9 Trillion in 2028)
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2025 KRW 11.314 Trillion → 2026(E) KRW 13.424 Trillion → 2027(E) KRW 17.022 Trillion → 2028(E) KRW 19.632 Trillion
- Operating Profit (KRW): 2025 KRW 913.0 Billion → 2026(E) KRW 1.654 Trillion → 2027(E) KRW 3.560 Trillion → 2028(E) KRW 4.909 Trillion
- Net Profit (KRW): 2025 KRW 706.0 Billion → 2026(E) KRW 1.324 Trillion → 2027(E) KRW 2.935 Trillion → 2028(E) KRW 4.027 Trillion
- EPS (KRW): 2025 KRW 9,099 → 2026(E) KRW 17,054 → 2027(E) KRW 37,818 → 2028(E) KRW 51,890
- Valuation Multiples (PER / PBR / ROE):
- 2025: PER 28.0x, PBR 2.1x, ROE 7.7%
- 2026(E): PER 128.0x, PBR 15.7x, ROE 13.0%
- 2027(E): PER 57.8x, PBR 12.7x, ROE 24.3%
- 2028(E): PER 42.1x, PBR 10.1x, ROE 26.7%
🚀 2. [Market Opportunities & Business Outlook]
- AI Server MLCC Long-Term Supply Contract Disclosed:
- Contract Scope: Disclosed a KRW 454.0 Billion contract to supply AI server MLCCs for a global cloud customer covering January 1, 2027 through December 31, 2027.
- Customer Risk Perception: While MLCCs represent a negligible fraction of server rack BoM costs, procurement bottlenecks halt server deployments, compelling hyperscalers to directly initiate LTAs. Global supply capability is constrained to a duopoly of SEMCO and Murata.
- Expansion Headroom: Ongoing discussions for additional device models and potential contract extensions across other hyperscaler clients.
- Commodity Capacity Reduction & Severe Cannibalization:
- Utilization & New Platforms: MLCC capacity utilization reached 95% in 1Q26; full ramp-up of the Rubin platform and 2027 contracted volumes will exacerbate supply shortages.
- Exchange Ratio: AI server MLCCs exhibit an exchange ratio of roughly 1:3 against commodity units. Factoring in lower early yields, real capacity cannibalization is even greater, driving price increase spillovers into standard commodity lines.
- Structural Transformation of Passive Components:
- Following the May 20 silicon capacitor contract, the new MLCC agreement cements the pivot of passive components from Just-in-Time commodity parts to LTA-based specialty hardware, driving simultaneous EPS upgrades and multiple expansion.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a conventional commodity passive supplier exposed to short-term delivery cycles, but as a premier high-value specialty platform where global hyperscalers directly initiate long-term agreements (LTAs) to mitigate severe supply risks. This perspective looks past cyclical variations to emphasize structural multiple re-rating and long-term earnings visibility, underpinned by heavy capacity cannibalization (1:3 exchange ratio) in AI server MLCCs and multi-year customer commitments across specialty portfolios.
To evaluate whether this investment thesis unfolds as anticipated, key verification checkpoints include the operational execution of the KRW 454.0 Billion 2027 AI server MLCC contract, the broadening of LTAs into additional device models and client accounts, the transmission of price hike spillovers into standard MLCC categories, and the trajectory toward KRW 3.5+ Trillion in operating profit by 2027 under sustained 95%+ capacity utilization. Progress on these fronts can be tracked via upcoming quarterly earnings announcements, official investor relations 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.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
