Brokerage : iM Securities
Analyst : Eui-young Ko (IT RA: Jeongha Park)
Investment Rating : Buy (Maintained)
Target Price : KRW 1,400,000 (Raised)
Core Momentum : Structural business transformation toward long-term fixed LTAs, high-ROIC fabless commercialization via a KRW 1.557 Trillion silicon capacitor contract, and SOTP-based target market cap expansion toward KRW 104 Trillion
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Buy (Maintained) / 12-Month Target Price KRW 1,400,000 (Raised by +27.3% from KRW 1,100,000) (Closing price KRW 1,061,000 as of May 20, 2026; upside potential 32.0%)
- Valuation Methodology: Shifted valuation framework from P/B to Sum-of-the-Parts (SOTP) using division-specific target P/E multiples. Applied a +20% premium (47x) over global peer averages (39x) for Component and Package divisions, and 15x for Optics.
- Division Valuation: Component KRW 75 Trillion, Package KRW 27 Trillion, Optics KRW 2 Trillion (Consolidated target market cap of KRW 104 Trillion)
- Operating Profit Forecast Upgrades (vs. Consensus):
- 2026(E) Operating Profit: KRW 1.5881 Trillion (+3% vs. previous estimate, beating consensus by +2%)
- 2027(E) Operating Profit: KRW 2.8482 Trillion (+5% vs. previous estimate, beating consensus by +21%)
- 2028(E) Operating Profit: KRW 3.7578 Trillion (+13% vs. previous estimate, beating consensus by +26%)
- 2025–2028 Operating Profit CAGR projected at approximately +60%
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2025 KRW 11.314 Trillion → 2026(E) KRW 13.310 Trillion → 2027(E) KRW 16.223 Trillion → 2028(E) KRW 18.117 Trillion
- Operating Profit (KRW): 2025 KRW 913.3 Billion → 2026(E) KRW 1.5881 Trillion → 2027(E) KRW 2.8482 Trillion → 2028(E) KRW 3.7578 Trillion
- Operating Profit Margin (OPM): 2025 8.1% → 2026(E) 11.9% → 2027(E) 17.6% → 2028(E) 20.7%
- Net Profit (KRW): 2025 KRW 706.0 Billion → 2026(E) KRW 1.264 Trillion → 2027(E) KRW 2.319 Trillion → 2028(E) KRW 3.089 Trillion
- EPS (KRW): 2025 KRW 9,099 → 2026(E) KRW 16,293 → 2027(E) KRW 29,888 → 2028(E) KRW 39,806
- Valuation Multiples (PER / PBR / ROE):
- 2025: PER 28.0x, PBR 2.1x, ROE 7.7%
- 2026(E): PER 65.1x, PBR 7.7x, ROE 12.5%
- 2027(E): PER 35.5x, PBR 6.4x, ROE 19.7%
- 2028(E): PER 26.7x, PBR 5.3x, ROE 21.8%
🚀 2. [Market Opportunities & Business Outlook]
- Mega Silicon Capacitor Supply Contract (KRW 1.557 Trillion):
- Contract Scope: Disclosed a supply contract worth KRW 1.557 Trillion (equivalent to 13.8% of 2025 revenue) with a global tech enterprise, spanning January 2027 to December 2028.
- Revenue & Profit Recognition: Expected to generate KRW 500.0–600.0 Billion in revenue and KRW 100.0–150.0 Billion in operating profit in 2027 (~4% of total OP), rising to KRW 900.0 Billion–1.0 Trillion in revenue and KRW 180.0–250.0 Billion in operating profit in 2028 (~6% of total OP).
- Technical Edge: Utilizes wafer-level micro-machining to achieve ultra-thin form factors and high capacitance density. Enables die-adjacent placement and package-embedded integration to suppress high-frequency noise in high-power AI accelerators.
- Three Strategic Takeaways for Business Transformation:
- Emergence of LTAs in Passives: Customers are securing long-term binding agreements for passive components critical to advanced packaging architectures. Paves the way for similar multi-year LTAs in AI server MLCCs.
- High-ROIC Fabless Business Model: Production outsourced to external foundries, bypassing heavy capital expenditures and depreciation overhead, structurally boosting company ROIC.
- Turnkey Power & Packaging Solutions: Unique capability to supply FC-BGA, high-end MLCCs, and silicon capacitors in a unified turnkey offering as AI hardware designs escalate in complexity.
- Segmental Financial Outlook:
- Component: Revenue KRW 6.237 Trillion (16.1% OPM) in 2026 → KRW 8.424 Trillion (23.4% OPM) in 2027 → KRW 9.566 Trillion (27.1% OPM) in 2028.
- Package: Revenue KRW 3.159 Trillion (13.5% OPM) in 2026 → KRW 3.734 Trillion (19.3% OPM) in 2027 → KRW 4.339 Trillion (23.1% OPM) in 2028.
- Optics: Revenue KRW 3.914 Trillion (4.1% OPM) in 2026 → KRW 4.065 Trillion (4.0% OPM) in 2027 → KRW 4.211 Trillion (4.2% OPM) in 2028.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a traditional cyclical component vendor, but as a structurally transforming enterprise transitioning from cyclical swings into predictable growth through long-term agreements (LTAs) and customer-shared FC-BGA CapEx. This perspective emphasizes the validation of high-ROIC fabless commercialization demonstrated by the KRW 1.557 Trillion silicon capacitor contract and the justification of a KRW 104 Trillion target market cap under a revised Sum-of-the-Parts (SOTP) framework.
To evaluate whether this investment thesis unfolds as anticipated, key verification checkpoints include meeting annualized silicon capacitor revenue milestones (KRW 500B–600B in 2027, KRW 900B–1T in 2028) with targeted fabless profit margins, expanding LTA frameworks into AI server MLCC supply, and achieving steep margin expansion across Component (23.4% OPM by 2027) and Package (19.3% OPM by 2027) divisions. Progress on these fronts can be tracked via upcoming quarterly earnings announcements, official investor relations presentations, and periodic regulatory filings.
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