Brokerage : Kiwoom Securities
Analyst : So-won Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 210,000 (Maintained)
Core Momentum : Poised for a >40% YoY operating profit surge in 2025 past near-term FX headwinds, driven by tight supply in AI server MLCCs, the 4Q24 ramp of AI accelerator FC-BGA substrates, and cross-divisional AI catalysts.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 210,000 (Maintained, recommending aggressive accumulation given attractive valuation at 12M Forward P/B of 1.17x)
- Current Share Price (As of Sep 25, 2024): KRW 135,700
- Market Capitalization: KRW 10.14T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024F KRW 10.30T → 2025F KRW 11.61T (Text: ~KRW 11.6T, +13% YoY)
- Operating Profit: 2023A KRW 639.4B → 2024F KRW 816.0B (OPM 7.9%) → 2025F KRW 1.16T (Table: KRW 1,155.2B, +42% YoY, OPM 10.0% / Top text note: KRW 1,168.1B, +43% YoY)
- Net Profit (Controlling): 2023A KRW 423.0B → 2024F KRW 665.6B (+57.4% YoY) → 2025F KRW 883.6B (+32.8% YoY)
- EPS: 2023A KRW 5,450 → 2024F KRW 8,577 → 2025F KRW 11,387
- PER: 2023A 28.1x → 2024F 15.8x → 2025F 11.9x
- PBR: 2023A 1.51x → 2024F 1.25x → 2025F 1.14x
- ROE: 2023A 5.5% → 2024F 8.2% → 2025F 10.0%
- Dividend Yield (2024E): 1.0%
- 3Q24 Earnings Preview: Projected Revenue of KRW 2.6723T (+13% YoY, +4% QoQ), Operating Profit of KRW 229.2B (+25% YoY, +10% QoQ, OPM 8.6%), slightly missing market consensus (KRW 252.6B) due to USD/KRW FX headwinds (every KRW 10 drop in USD/KRW reduces quarterly operating profit by ~KRW 5.0B) and sluggish smartphone-centric IT set demand. However, Component division OPM is projected to reach 13.3% (+1.1%p QoQ, +2.9%p YoY), marking a 9-quarter high.
- 4Q24 Earnings Forecast: Projected Revenue of KRW 2.4216T (+5% YoY, -9% QoQ), Operating Profit of KRW 198.4B (+80% YoY, -13% QoQ). While a lower USD/KRW rate and seasonal destocking will cause a QoQ decline, destocking intensity is expected to be moderate given lean inventory levels. Commercial shipments of AI accelerator FC-BGA substrates begin in 4Q24.
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC): Robust AI server MLCC demand sustains tight market conditions despite sluggish consumer IT sets. High-value product mix optimization in 2024 followed by broadening AI device penetration in 2025 is set to drive structural MLCC industry strength.
- Package Substrate Division: Outperforming the industry through market share expansion within key accounts. The server share within FC-BGA is forecast to increase from ~25% in 2024 to 30%–40% in 2025. Additional growth will be driven by 4Q24 AI accelerator FC-BGA deliveries and 2025 AI PC BGA expansion.
- Optics & Communication Solutions: Catalyzed by new automotive camera customer acquisitions.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not through the lens of transient FX headwinds (USD/KRW rate decline) and smartphone set softness, but as an advanced electronics hardware manufacturer trading at an attractive valuation (12M Forward P/B 1.17x) with strengthening growth momentum across all business units. Beyond near-term seasonal destocking, the investment thesis centers on persistent tight supply in AI server MLCCs (lifting Component OPM to 13.3%), the commencement of AI accelerator FC-BGA commercial shipments in 4Q24, and expanding AI device penetration driving 2025 full-year operating profit to KRW 1.16T (+42% YoY).
To verify whether this investment thesis progresses according to expectations, key tracking points include achieving the 2025 full-year operating profit projection (KRW 1.1552T, +42% YoY), the commercial shipment ramp of AI accelerator FC-BGA substrates alongside expanding server FC-BGA mix to 30%–40%, sustaining elevated Component operating margins (>13%), and securing new client design wins in automotive camera modules. These factors can be monitored through upcoming quarterly financial announcements, official company IR presentations, and regulatory filings.
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