Brokerage : Kiwoom Securities
Analyst : So-won Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 340,000 (Raised)
Core Momentum : Multi-year earnings expansion projected on the back of 4Q25 earnings beat, expected 1Q26 consensus outperformance, an AI server-driven boom across MLCC and FC-BGA, and emerging new business catalysts
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; Target Price raised to KRW 340,000 reflecting upward revisions in earnings forecasts and valuation multiples (vs. current price of KRW 272,000).
- 4Q25 Provisional Earnings Review:
- Revenue: KRW 2.9021 Trillion (flat QoQ, +16% YoY; beating consensus of KRW 2.840 Trillion by +2%).
- Operating Profit: KRW 239.5 Billion (-8% QoQ, +108% YoY, OPM 8.3%; beating consensus of KRW 228.5 Billion and analyst model of KRW 230.9 Billion).
- Divisional Highlights: Component division OPM reached 10.6% (substantially exceeding the 3-year 4Q average of 4%); FC-BGA revenue grew +17% QoQ and +23% YoY supported by high-value server CPU substrate demand.
- 1Q26 Earnings Forecast:
- Revenue: KRW 3.0573 Trillion (+5% QoQ, +12% YoY; KRW 3.057 Trillion in table).
- Operating Profit: KRW 288.0 Billion (+20% QoQ, +44% YoY; projected to beat consensus of KRW 267.8 Billion; KRW 288.0 Billion in table).
- Annual Financial Projections (2025F – 2026F):
- 2025F: Revenue KRW 11.3144 Trillion / Operating Profit KRW 913.3 Billion / Controlling Net Profit KRW 707.1 Billion
- 2026F: Revenue KRW 12.6184 Trillion (KRW 12.618 Trillion in table) / Operating Profit KRW 1.2891 Trillion (+41% YoY; KRW 1.289 Trillion in table) / Controlling Net Profit KRW 1.0228 Trillion
- 2026F Operating Profit Forecast by Business Division (Financial Table):
- Component: KRW 830.0 Billion (OPM 14%)
- Package Solutions: KRW 295.0 Billion (OPM 11%)
- Optics & Communication: KRW 163.0 Billion (OPM 4%)
- Key Financial Multiples (2026F):
- EPS: KRW 13,181 (+44.6% YoY)
- P/E: 21.5x / P/B: 2.05x (trading around 2.0x P/B in text)
- ROE: 10.1% / EV/EBITDA: 8.9x
- Operating Margin (OPM): 10.2% (10% in table)
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC):
- In 4Q25, industrial and automotive mix expansion drove an estimated +2% QoQ increase in Blended ASP despite seasonal destocking, maintaining a tight ~92% utilization rate (shipments -9% QoQ).
- Despite IT set macro uncertainty from memory price hikes, strong demand in automotive and server lines is expected to drive both volume (Q) and quality (P) growth in 2026.
- 2026 Component division operating profit is projected to grow +34% YoY.
- Package Solutions Division (FC-BGA):
- Benefiting from commercial mass production and market share expansion in next-gen products with existing clients.
- Expanding new customer accounts in AI servers and network infrastructure, with full capacity utilization expected to be sustained from 2H26 onward.
- 2026 Package Solutions operating profit is projected to surge +109% YoY.
- New Growth Initiatives (Robotics & Glass Substrates):
- Expanding component supply initiatives targeting major humanoid robotics manufacturers.
- Glass substrate projects developed in collaboration with global Big Tech clients are expected to emerge as a mid-to-long term catalyst.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a conventional cyclical components vendor vulnerable to consumer IT demand fluctuations, but as a prime AI hardware leader entering an industry boom across both MLCC and FC-BGA divisions powered by AI server and automotive infrastructure. Rather than focusing on IT set demand uncertainties, the analytical thesis places greater strategic significance on MLCC margin resilience demonstrated by 92% utilization and ASP gains in 4Q25, the +109% operating profit surge in FC-BGA backed by 2H26 full capacity utilization, and mid-to-long term growth visibility unlocked by humanoid robotics and Big Tech glass substrate projects.
To assess whether this investment thesis continues to materialize, key tracking points include achieving the 1Q26 operating profit consensus beat (KRW 288.0 Billion), confirming full capacity utilization across FC-BGA lines in 2H26 driven by new AI server/network accounts, progress in humanoid robotics component shipments and Big Tech glass substrate collaborations, and achieving the projected 2026 annual operating profit (KRW 1.29 Trillion). These variables can be verified through upcoming quarterly earnings releases, official company IR presentations, periodic regulatory filings (quarterly and annual reports), and DART disclosures.
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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