Brokerage : Shinhan Securities
Analyst : Kang-ho Oh
Investment Rating : BUY (Maintained)
Target Price : KRW 210,000 (Maintained)
Core Momentum : The proliferation of AI devices is driving demand recovery and product mix enrichment, positioning the company for concurrent earnings growth and valuation re-rating into 2025.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Valuation Basis: Maintained at KRW 210,000 (applied a target PBR of 1.9x, the average from the 2020–2021 earnings recovery cycle, to 2024F BPS of KRW 108,514).
- Investment Rating: BUY (Maintained)
- Stock Data (As of July 31, 2024): Current Price KRW 159,600, Market Capitalization KRW 11.92 Trillion, Foreign Ownership 34.8%
- Key Financial Forecasts (2023 → 2024F → 2025F):
- Revenue: KRW 8.91 Trillion → KRW 10.45 Trillion → KRW 11.29 Trillion
- Operating Profit: KRW 639.4 Billion → KRW 864.9 Billion → KRW 1.08 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 734.8 Billion → KRW 888.9 Billion
- PER / PBR: 28.3x / 1.5x → 17.0x / 1.5x → 14.0x / 1.4x
- ROE: 5.5% → 9.0% → 10.1%
- EV/EBITDA: 7.9x → 6.2x → 5.3x
🚀 2. [Market Opportunities & Business Outlook]
- Q2 2024 Earnings Review:
- Consolidated revenue reached KRW 2.58 Trillion and operating profit stood at KRW 208.1 Billion (+2% YoY, OPM 8.1%), meeting estimates and market consensus.
- Revenue by Segment: Component KRW 1.16 Trillion (+15% YoY, +13% QoQ), Optics & Communication KRW 920.7 Billion (+19% YoY, -22% QoQ), Package Solution KRW 499.1 Billion (+14% YoY, +17% QoQ).
- H2 2024 Outlook & Capacity Utilization:
- Component (MLCC): Benefiting from AI device momentum and volume expansion. Blended capacity utilization is projected to climb to 90–95% in H2 (vs. 80–85% in H1), with the industrial MLCC portion estimated at roughly 20%.
- Package Solution: High-value product mix expansion in mobile and servers is forecast to drive 2024 annual revenue up +17% YoY to KRW 2.03 Trillion, supported by growing server/network FC-BGA demand.
- Earnings Trajectory & Valuation Re-rating:
- Quarterly operating profit is projected to follow an upward trajectory: Q1 KRW 180.3 Billion → Q2 KRW 208.1 Billion → Q3 KRW 264.5 Billion → Q4 KRW 212.0 Billion.
- The transition from 2024 earnings recovery to 2025 growth acceleration (operating profit exceeding KRW 1 Trillion) supports valuation multiple expansion.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a cyclical hardware component vendor, but as a prime beneficiary entering a structural earnings and valuation re-rating cycle driven by the proliferation of AI devices and high-margin product mix expansion. The overarching perspective places greater significance on the qualitative margin uplift resulting from H2 utilization rates of 90–95% and server/network substrate growth than on short-term baseline demand fluctuations.
To assess the progression of this investment thesis moving forward, verification should focus on whether MLCC utilization successfully achieves the 90–95% range in H2, whether industrial MLCC reaches its target 20% revenue share alongside a 17% full-year top-line expansion in Package Solution, and whether quarterly operating profit momentum tracks toward the KRW 1 Trillion milestone for 2025. These developments can be monitored through upcoming quarterly earnings releases, official investor relations presentations, and periodic regulatory filings.
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