Brokerage : Kiwoom Securities
Analyst : So-won Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 250,000 (Raised)
Core Momentum : Target price raised to KRW 250,000 driven by anticipated off-season earnings resilience in Q4, expanding Non-IT MLCC revenue mix, potential MLCC price rebounds in 2026, and expanding server FC-BGA substrate shipments.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised to KRW 250,000, reflecting revised earnings estimates and the application of a target multiple of 1.8x (2H20–1H21 average 12MF P/B).
- Base Share Price (As of Oct 1, 2025): KRW 193,300 (Market Cap: KRW 14.44 Trillion, KOSPI: 3,455.83 pt, Shares Outstanding: 74.69M, 3-Month Daily Avg Volume: 470K shares, Foreign Ownership: 37.4%, Dividend Yield: 0.9%, BPS: KRW 123,974).
- Valuation Multiples & Trend:
- PER: 2023: 28.1x → 2024: 14.1x → 2025(E): 22.8x → 2026(E): 16.0x
- PBR: 2023: 1.51x → 2024: 1.09x → 2025(E): 1.56x → 2026(E): 1.40x
- EV/EBITDA: 2023: 7.9x → 2024: 6.0x → 2025(E): 7.4x → 2026(E): 6.1x
- ROE: 2023: 5.5% → 2024: 8.2% → 2025(E): 7.1% → 2026(E): 9.2%
- Net Debt Ratio: 2023: -0.1% → 2024: -2.8% → 2025(E): -11.8% → 2026(E): -17.1%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.15 Trillion, Operating Profit KRW 860.7 Billion (OPM 7.7%), Pre-tax Profit KRW 829.4 Billion, Net Profit KRW 681.2 Billion, Controlling Net Profit KRW 657.9 Billion, EPS KRW 8,477 (-3.1% YoY).
- 2026(E): Revenue KRW 12.50 Trillion, Operating Profit KRW 1.16 Trillion (+35% YoY, OPM 9.3%, beats consensus of KRW 1.05 Trillion), Pre-tax Profit KRW 1.18 Trillion, Net Profit KRW 968.4 Billion, Controlling Net Profit KRW 935.2 Billion, EPS KRW 12,052 (+42.2% YoY).
- 3Q25 & 4Q25 Earnings Outlook:
- 3Q25 Outlook: Projected Revenue of KRW 2.86 Trillion (+3% QoQ, +10% YoY) and Operating Profit of KRW 255.3 Billion (+20% QoQ, +14% YoY), beating the elevated consensus (KRW 243.0 Billion). Component OPM estimated at 14.4% (3-year high) with MLCC utilization at 95% (+5%p QoQ).
- 4Q25 Outlook: Projected Revenue of KRW 2.76 Trillion (-4% QoQ, +11% YoY) and Operating Profit of KRW 191.8 Billion (-25% QoQ, +67% YoY), beating market expectations (KRW 178.7 Billion). Component OPM projected at 10% (beating the 3-year Q4 average of 4%).
🚀 2. [Market Opportunities & Business Outlook]
- 3Q25 Component Division Strength:
- MLCC capacity utilization rose to 95%, driven by expanding AI server and automotive demand paired with IT seasonality.
- MLCC inventory levels remained lean below 4 weeks, staying below normal levels (5–6 weeks).
- 4Q25 Off-Season Headwinds Easing:
- IT set MLCC revenue share declined by ~10%p YoY, easing year-end destocking pressures.
- Expanding Non-IT (server/automotive) mix helps defend Q4 Component operating margin at 10%.
- Early Stage of MLCC Upcycle & 2026 Expansion:
- Limited off-season profit declines indicate solid underlying demand and favorable pricing negotiation leverage.
- Potential price rebounds across select MLCC lines starting in 2026, supported by tight inventory and high utilization (similar to the 2020–2021 cycle).
- Combined with expanding server FC-BGA shipments, 2026 annual Operating Profit is projected to reach KRW 1.16 Trillion.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as entering the early stages of a structural MLCC upcycle, mitigating traditional Q4 off-season profit contraction through a reduced IT set exposure and an expanding server/automotive mix. The core perspective emphasizes that a 3-year high Component OPM (14.4%) in Q3, lean MLCC inventory below 4 weeks, and operational leverage from select MLCC price rebounds and server FC-BGA supplies in 2026 justify applying a target multiple of 12MF P/B 1.8x.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q4 2025 Operating Profit in the KRW 190.0 Billion range (projected at KRW 191.8 Billion) to confirm an off-season consensus beat; 2) sustaining MLCC inventory below 4 weeks while defending Component OPM at 10% in Q4; and 3) the actual realization of price rebounds across select MLCC product lines and expanded server FC-BGA shipments, supporting 2026 Operating Profit of KRW 1.16 Trillion. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
📢 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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