Brokerage : Shinhan Securities
Analyst : Kang-ho Oh
Investment Rating : BUY (Maintained)
Target Price : KRW 210,000 (Maintained)
Core Momentum : The proliferation of on-device AI and expanding shipments of high-value industrial components for AI servers and power modules are expected to drive robust earnings recovery in 2024 and accelerated growth in 2025.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: Target Price maintained at KRW 210,000 (applied a target PBR of 1.9x, based on the historical average during the 2020–2021 recovery cycle, to 2024F BPS of KRW 108,355), Rating maintained at BUY
- Stock Data (As of July 8, 2024): Current Price KRW 163,300, Market Capitalization KRW 12.20 Trillion, Foreign Ownership 34.4%
- Key Financial Forecasts (2023 → 2024F → 2025F):
- Revenue: KRW 8.91 Trillion → KRW 10.13 Trillion → KRW 10.91 Trillion
- Operating Profit: KRW 639.4 Billion → KRW 871.6 Billion → KRW 1.06 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 730.1 Billion → KRW 860.7 Billion
- PER / PBR: 28.3x / 1.5x → 17.5x / 1.5x → 14.8x / 1.4x
- ROE: 5.5% → 9.0% → 9.9%
- EV/EBITDA: 7.9x → 6.3x → 5.5x
🚀 2. [Market Opportunities & Business Outlook]
- Q2 2024 Outlook:
- Consolidated operating profit is projected at KRW 201.4 Billion (+12% QoQ) with an operating margin of 8.5% (+1.6%p QoQ).
- Key performance drivers include rising Component capacity utilization and higher sales mix of premium products.
- 2024 Annual Outlook & Segment Performance:
- Full-year 2024 operating profit is forecast at KRW 871.6 Billion (+36% YoY), with operating margin expanding to 8.6% (+1.4%p YoY).
- Component (MLCC): Annual revenue is projected to grow +15% YoY to KRW 4.49 Trillion, driven by expanded shipments of industrial products for AI servers and power systems.
- Optics & Package: Optics & Communication revenue is expected to grow +16% YoY to KRW 3.82 Trillion, while Package Solution revenue is projected at KRW 1.82 Trillion (+6% YoY).
- Utilization & Medium-term Drivers:
- MLCC capacity utilization is expected to ramp up from 80–85% in H1 2024 to 90–95% in H2 2024.
- Dual expansion in pricing (P) and volume (Q) driven by AI hardware adoption is set to lay the foundation for accelerated earnings growth exceeding KRW 1 Trillion in operating profit by 2025.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not merely as a passive beneficiary of traditional IT cycles, but as an enterprise entering a fundamental earnings level-up phase propelled by on-device AI adoption and a structural shift toward high-margin industrial MLCCs (AI servers and power). The overarching perspective places greater significance on the qualitative margin expansion driven by H2 utilization reaching 90–95% and simultaneous P and Q gains than on near-term macro volatility.
To evaluate the ongoing validity of this investment thesis, verification should center on whether MLCC capacity utilization successfully ramps up to 90–95% in the second half, whether the Component division delivers its projected 15% YoY top-line growth backed by AI server/power demand, and whether quarterly earnings momentum continues to track toward the KRW 1 Trillion operating profit mark for 2025. These operational milestones can be verified through future quarterly financial announcements, investor relations presentations, and regulatory filings.
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