Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 225,000 (Raised)
Core Momentum : Target price raised based on anticipated MLCC price increases in 2026 driven by Tier-1 oligopoly and effective capacity contraction, alongside structural long-term growth (CAGR +33%) in automotive FC-BGA substrates for Customer T.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised by +25% from KRW 180,000 to KRW 225,000 (24.8% upside potential), reflecting a shift in SoTP valuation base from 2025 to 2026 and upward revisions in 2026 divisional operating profits (Component +6%, Substrate +17%, Optics +5.4%).
- Base Share Price (As of Sep 9, 2025): KRW 180,300 (Market Cap: KRW 13.47 Trillion, KOSPI: 3,260.05 pt, Shares Outstanding: 75.00M, Free Float: 73.5%, Foreign Ownership: 36.1%, Beta: 1.11, 52-Week High: KRW 180,300 / Low: KRW 105,600).
- Valuation Multiples & Trend:
- PER: 2023: 28.1x → 2024: 14.1x → 2025(E): 21.6x → 2026(E): 15.0x → 2027(E): 12.4x
- PBR: 2023: 1.5x → 2024: 1.1x → 2025(E): 1.7x → 2026(E): 1.5x → 2027(E): 1.4x
- ROE: 2023: 5.5% → 2024: 8.2% → 2025(E): 7.2% → 2026(E): 9.8% → 2027(E): 10.9%
- Dividend Yield: 2023: 0.8% → 2024: 1.5% → 2025(E): 1.0% → 2026(E): 1.0% → 2027(E): 1.0%
- Earnings Forecast Summary (Post-Revision):
- 2025(E): Revenue KRW 11.09 Trillion (+7.7% YoY), Operating Profit KRW 814.7 Billion (+10.8% YoY, OPM 7.4%, in line with consensus of KRW 827.0 Billion), Net Profit KRW 647.0 Billion, EPS KRW 8,337.
- 2026(E): Revenue KRW 11.97 Trillion (+8.0% YoY, +3.1% vs. prev.), Operating Profit KRW 1.07 Trillion (+31.0% YoY, +8.1% vs. prev., OPM 8.9%), Net Profit KRW 932.5 Billion, EPS KRW 12,017.
- 2027(E): Revenue KRW 13.42 Trillion, Operating Profit KRW 1.31 Trillion (OPM 9.7%), Net Profit KRW 1.13 Trillion, EPS KRW 14,572.
- 3Q25 Preview & 4Q25 Preview (Post-Revision):
- 3Q25 Outlook: Projected Revenue of KRW 2.86 Trillion (+10.0% YoY, +2.6% QoQ) and Operating Profit of KRW 245.5 Billion (+15.3% YoY, +15.3% QoQ, OPM 8.6%), revised up by +1.0% in Revenue and +3.3% in Operating Profit vs. prev.
- 4Q25 Outlook: Projected Revenue of KRW 2.70 Trillion and Operating Profit of KRW 155.7 Billion (OPM 5.8%).
🚀 2. [Market Opportunities & Business Outlook]
- Investment Point 1: Tier-1 Oligopoly & Effective Capacity Contraction → 2026 Price Hikes:
- Tier-1 MLCC utilization estimated in the mid-to-high 90% range in 3Q25, approaching 100% by 3Q26.
- Pricing power supported by: ① Tier-1 oligopoly, ② production efficiency loss from high-layer/high-reliability specs reducing effective capacity relative to nominal expansion, and ③ Taiyo Yuden trimming 2026 expansion guidance (from 10–15% to 5%).
- High-end mix expansion creates a structural cycle: “High-layering → Efficiency loss → Effective capacity reduction → Utilization increase → ASP hikes”.
- Investment Point 2: Tipping Point Starting with Customer T (FC-BGA Expansion):
- FC-BGA sales to Customer T projected to grow from KRW 70.6 Billion in 2025 to KRW 896.0 Billion in 2034 (CAGR +33%).
- Key drivers: ① Vehicle volume growth (1.70M → 7.61M units) alongside new shipments for CyberCab (2026) and Optimus (2027); ② Generational mix upgrades (AI4 → AI5/6 → AI7) lifting blended ASP from $13.5 in 2025 to $59.7 in 2033.
- Even assuming a 5% annual price erosion, increased surface area and layer counts offset price drops. Total automotive FC-BGA TAM for Customer T is projected to expand from $50 Million to $949 Million.
- Dual leverage of volume and product mix is expected to drive revenues to KRW 438.4 Billion by 2031 and KRW 896.0 Billion by 2034.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as entering a structural earnings expansion phase driven by effective capacity contraction and pricing power in high-end MLCCs, alongside exponential growth in automotive/physical AI FC-BGA substrates for Customer T. The core perspective highlights that rather than focusing on quarterly volatility, market attention should center on effective capacity constraints pushing Tier-1 MLCC utilization toward 100% by 2026, triggering price increases, and long-term FC-BGA revenue expansion with Customer T (CAGR +33%), which justify shifting the SoTP valuation base to 2026 and upgrading the target price.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q3 2025 Operating Profit in the KRW 245.0 Billion range (projected at KRW 245.5 Billion) to sustain earnings momentum; 2) sustaining Tier-1 MLCC utilization in the mid-to-high 90% range and the actual realization of price hikes for high-end MLCC lines in 2026; and 3) commercial shipment ramp-up of next-gen FC-BGA substrates (AI5/6) for Customer T, supporting 2026 corporate Operating Profit of KRW 1.07 Trillion. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
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