Brokerage : Kyobo Securities
Analyst : Bo-ryeon Choi
Investment Rating : BUY (Maintained)
Target Price : KRW 310,000 (Raised)
Core Momentum : Earnings growth and valuation multiple re-rating driven by a 3Q earnings beat, expanding high-value Non-IT mix across AI and automotive, and resilient off-season profitability.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised to KRW 310,000 (29.70% upside potential). Derived by applying a historical peak P/B multiple of 2.4x to the projected BPS of KRW 131,006, yielding a fair value of KRW 314,414.
- Base Share Price (As of Oct 29, 2025): KRW 232,000 (Market Cap: KRW 17.63 Trillion, KOSPI: 4,081.15 pt, KOSDAQ: 901.59 pt, Shares Outstanding: 74.69M, Foreign Ownership: 38.35%)
- Valuation Multiples & Trend:
- PER: 2024: 13.7x → 2025(E): 25.0x → 2026(E): 19.8x → 2027(E): 16.7x
- PBR: 2024: 1.1x → 2025(E): 1.9x → 2026(E): 1.8x → 2027(E): 1.6x
- PCR: 2024: 5.3x → 2025(E): 8.9x → 2026(E): 8.3x → 2027(E): 7.6x
- EV/EBITDA: 2024: 5.9x → 2025(E): 10.1x → 2026(E): 8.8x → 2027(E): 7.7x
- ROE: 2024: 8.2% → 2025(E): 7.7% → 2026(E): 9.1% → 2027(E): 9.9%
- Earnings Forecast Summary:
- 2025(E): Revenue KRW 11.19 Trillion (+8.7% YoY), Operating Profit KRW 887.0 Billion (+20.7% YoY, OPM 7.9%), Net Profit KRW 723.0 Billion, EPS KRW 9,280 (+2.9% YoY).
- 2026(E): Revenue KRW 12.21 Trillion (+9.1% YoY), Operating Profit KRW 1.09 Trillion (+23.3% YoY, OPM 9.0%), Net Profit KRW 912.0 Billion, EPS KRW 11,725 (+26.3% YoY).
- 2027(E): Revenue KRW 13.35 Trillion (+9.4% YoY), Operating Profit KRW 1.29 Trillion (+18.2% YoY, OPM 9.7%), Net Profit KRW 1.08 Trillion, EPS KRW 13,914 (+18.7% YoY).
- 3Q25 Results & 4Q25 Preview:
- 3Q25 Results: Revenue of KRW 2.89 Trillion (+10.5% YoY, +3.8% QoQ) and Operating Profit of KRW 260.3 Billion (+15.7% YoY, +22.2% QoQ, OPM 9.0%), beating market consensus (Revenue KRW 2.85 Trillion, Operating Profit KRW 249.9 Billion).
- 4Q25 Outlook: Projected Revenue of KRW 2.77 Trillion (+11.3% YoY, -4.0% QoQ) and Operating Profit of KRW 213.5 Billion (+85.5% YoY, -18.0% QoQ, OPM 7.7%).
🚀 2. [Market Opportunities & Business Outlook]
- 3Q25 Divisional Performance Highlights:
- Component Division: Maintained utilization rates in the upper 90% range, flat ASP, and inventory levels below 4 weeks. Volume growth driven by high-value products in AI, industrial, and automotive applications.
- Package Solution Division: Revenue expansion supported by higher FC-BGA shipments for servers and BGA shipments for mobile APs and memory.
- Optics & Communication Division: Revenue declined quarter-over-quarter due to lower shipments to overseas customers.
- 4Q25 Environment & AI Drivers:
- Despite off-season inventory adjustments in Q4, the company is set to sustain solid demand via automotive expansion, new orders for high-temperature/high-capacitance AI server MLCCs, and robust server AI FC-BGA demand.
- Expected to demonstrate structural resilience by generating over KRW 200.0 Billion in operating profit during the typical Q4 off-season.
- Continued earnings expansion aligned with the global AI investment cycle and broader valuation re-rating.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a company structurally dampening traditional Q4 off-season volatility by expanding its high-value Non-IT product mix across AI, industrial, and automotive applications. The core perspective emphasizes improved baseline earning power—driven by high MLCC utilization for AI servers and resilient server-oriented FC-BGA demand—rather than short-term inventory destocking headwinds, allowing the firm to fully participate in the global AI cycle.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q4 2025 operating profit above the KRW 200.0 Billion mark (projected at KRW 213.5 Billion) to confirm structural off-season resilience; 2) winning new orders for high-temperature/high-capacitance AI server MLCCs while maintaining utilization in the upper 90% range; and 3) sustained shipment expansion of server AI FC-BGA substrates in the Package Solution division. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate 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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