Brokerage : Kiwoom Securities
Analyst : So-won Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 190,000 (Maintained)
Core Momentum : Expanding MLCC profitability driven by high-value AI server and automotive demand—easing Yen depreciation concerns—combined with H2 substrate momentum in AI PCs and servers, is projected to sustain earnings growth.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: Target Price maintained at KRW 190,000, Rating maintained at BUY
- Stock Data (As of April 29, 2024): Share Price KRW 151,300, Market Capitalization KRW 11.30 Trillion, Foreign Ownership 31.5%
- Key Financial Forecasts (2023 → 2024F):
- Revenue: KRW 8.91 Trillion → KRW 9.92 Trillion
- Operating Profit: KRW 639.4 Billion → KRW 801.0 Billion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 627.7 Billion
- EPS: KRW 5,450 → KRW 8,089 (YoY Growth: -56.9% → +48.4%)
- BPS: KRW 108,098
- PER / PBR: 28.1x / 1.51x → 18.1x / 1.35x
- Operating Margin: 7.2% → 8.1%
- ROE: 5.5% → 7.7%
🚀 2. [Market Opportunities & Business Outlook]
- Q1 2024 Performance Review:
- Consolidated revenue reached KRW 2.62 Trillion (+14% QoQ, +30% YoY) and operating profit stood at KRW 180.3 Billion (+63% QoQ, +29% YoY), beating consensus estimates (KRW 171.3 Billion).
- High-value mix expansion in AI servers and automotive applications drove MLCC ASP gains, dissipating concerns regarding Yen depreciation-induced price erosion.
- Component division operating margin reached 10% (+4%p QoQ, +3%p YoY), beating the brokerage’s prior forecast (7%).
- Optics & Communication remained solid on Galaxy S24 Ultra sales and automotive share gains, whereas Package Solution stayed sluggish due to PC demand softness.
- Q2 2024 Outlook:
- Revenue is forecast at KRW 2.40 Trillion (-9% QoQ, +8% YoY) and operating profit at KRW 208.3 Billion (+16% QoQ, +2% YoY), beating consensus (KRW 202.6 Billion).
- Component operating margin is expected to expand further to 14% on sustained AI server/automotive orders and rising Greater China IT MLCC demand.
- Growth Drivers & Second-Half Catalysts:
- Q2 earnings growth will be reinforced by IT MLCC demand recovery, followed by full-scale momentum in AI PC and server substrates in H2 2024.
- Optics & Communication division will see new flagship model launch effects starting in Q3.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a passive component supplier held back by gradual IT hardware demand recovery or FX volatility, but as an operational outperformer establishing strong pricing and margin resilience through high-value AI server and automotive MLCC expansion. The overarching perspective places greater significance on the sharp margin improvement within the Component division (OPM rising from 10% in Q1 to an estimated 14% in Q2) and the second-half turnaround in AI PC/server packaging substrates than on near-term consumer set sluggishness.
To evaluate the ongoing progression of this investment thesis, verification should focus on whether the Component division’s operating margin successfully expands to the projected 14% in Q2, whether Greater China IT MLCC demand continues to recover, and whether the Package Solution division confirms a tangible rebound led by AI PC and server substrate orders in H2. These operational milestones can be monitored through upcoming quarterly financial announcements, investor relations materials, and periodic regulatory filings.
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