Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Maintained)
Core Momentum : Defending earnings via automotive and AI diversification despite 4Q seasonal destocking, with structural growth in 2025 driven by surging high-capacitance decoupling MLCCs for On-Device AI and visibility on next-generation businesses (solid-state batteries and glass substrates).
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / KRW 200,000 (Maintained, highlighting asymmetric upside potential trading at 2024F/2025F P/B of 1.1x and 1.0x vs. 5-year historical average of 1.5x)
- Current Share Price (As of Oct 29, 2024): KRW 120,200 (Upside potential: 66.4%)
- Market Capitalization: KRW 8.98T
- Key Financial Metrics & Forecast:
- Revenue: 2023A KRW 8.91T → 2024F KRW 10.19T → 2025F KRW 11.10T → 2026F KRW 12.04T
- Operating Profit: 2023A KRW 639.0B → 2024F KRW 786.0B (OPM 7.7%) → 2025F KRW 1.01T (Table: KRW 1,012.0B, OPM 9.2%) → 2026F KRW 1.16T (Table: KRW 1,155.0B, OPM 9.6%)
- Net Profit (Controlling): 2023A KRW 423.0B → 2024F KRW 540.0B → 2025F KRW 755.0B → 2026F KRW 885.0B
- EPS: 2023A KRW 5,450 → 2024F KRW 6,958 (+27.7% YoY) → 2025F KRW 9,724 → 2026F KRW 11,408
- PER: 2023A 28.1x → 2024F 17.3x → 2025F 12.4x → 2026F 10.5x
- PBR: 2023A 1.5x → 2024F 1.1x → 2025F 1.0x → 2026F 0.9x
- ROE: 2023A 5.5% → 2024F 6.6% → 2025F 8.5% → 2026F 9.3%
- Dividend Yield: 2023A 0.8% → 2024F 1.2% → 2025F 1.6% → 2026F 1.6%
- 3Q24 Earnings Review: Consolidated Revenue of KRW 2.60T (+11% YoY), Operating Profit of KRW 224.9B (+20% YoY), meeting 1-month consensus. MLCC price (P) and volume (Q) rose +6% and +2% QoQ respectively, defending profitability via automotive/industrial mix. Package Solutions revenue rose +11.9% QoQ on ARM CPU and AI server/ADAS FCBGA substrates, while Optics Solutions contracted due to seasonality and lower Greater China shipments.
- 4Q24 Earnings Forecast: Projected Revenue of KRW 2.37T (+3% YoY), Operating Profit of KRW 172.6B (+56% YoY), missing consensus by -8% and -17% respectively. Fab utilization will slightly decline, but inventory days remain lean at 4–5 weeks. YoY growth by division is projected at Component +11%, Package Solutions +20.4%, and Optics Solutions -14.9%.
🚀 2. [Market Opportunities & Business Outlook]
- On-Device AI Catalysts (Component Division): Mass adoption of AI-enabled smartphones in 2025 demands powerful on-device APs → higher operating frequencies → surging demand for decoupling MLCCs to reduce signal noise, driving higher MLCC capacitance (μF) content per smartphone.
- Package Substrate Division: Solid demand continues for high-value substrates, including ARM CPU substrates and AI server / ADAS FCBGA.
- Next-Generation Growth Engines:
- Oxide Solid-State Battery: Targeting small electronic devices utilizing MLCC stacking technology, aiming for commercial mass production in 2026.
- Glass Substrates: Equipment installation in 2H24 → Pilot production in 1H25 → Target commercial mass production in 2026.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not through the lens of short-term 4Q seasonal destocking, but as an advanced hardware components leader defending profitability through lean inventory (4–5 weeks) and structural product diversification into AI and automotive domains. The central thesis places greater emphasis on the 2025 On-Device AI proliferation cycle—which triggers substantial content growth in high-capacitance decoupling MLCCs—and long-term optionality from commercializing oxide solid-state batteries and glass substrates by 2026.
To verify whether this investment thesis progresses as projected, key tracking points include maintaining healthy 4–5 week inventory levels post-4Q destocking, achieving the 2025 operating profit forecast (KRW 1.01T), tangible expansion in decoupling MLCC capacitance (μF) content and pricing across new AI smartphone models, and the timely execution of glass substrate pilot production in 1H25. These developments can be monitored through upcoming quarterly financial announcements, official company IR presentations, and regulatory filings.
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