Brokerage : Shinhan Securities
Analyst : Kang-ho Oh, Ji-beom Seo
Investment Rating : BUY (Maintained)
Target Price : KRW 220,000 (Raised)
Core Momentum : Target price raised based on mid-to-long term earnings resilience across all divisions, a 9% upward revision in 2H25 operating profit estimates, and valuation multiple re-rating driven by rising FC-BGA mix and expanding industrial/automotive MLCC exposure.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained, Target Price raised by 16% to KRW 220,000 (21.9% upside potential), derived by shifting the valuation base to 2026 BPS (KRW 127,370) and applying a target P/B multiple of 1.8x (average P/B during the 2019–2021 earnings growth cycle).
- Base Share Price (As of Sep 10, 2025): KRW 180,500 (Market Cap: KRW 13.48 Trillion, Shares Outstanding: 74.70M, Free Float: 73.5%, 60-Day Daily Avg Turnover: KRW 65.24 Billion, Foreign Ownership: 36.1%).
- Valuation Multiples & Trend:
- PER: 2023: 28.3x → 2024: 14.3x → 2025(E): 23.8x → 2026(E): 17.5x → 2027(E): 14.9x
- PBR: 2023: 1.5x → 2024: 1.1x → 2025(E): 1.5x → 2026(E): 1.4x → 2027(E): 1.3x
- EV/EBITDA: 2023: 7.8x → 2024: 5.9x → 2025(E): 6.3x → 2026(E): 5.5x → 2027(E): 4.9x
- ROE: 2023: 5.5% → 2024: 8.2% → 2025(E): 6.6% → 2026(E): 8.4% → 2027(E): 9.3%
- Dividend Yield: 2023: 0.8% → 2024: 1.5% → 2025(E): 1.2% → 2026(E): 1.5% → 2027(E): 1.5%
- Earnings Forecast Summary (Upward Revision):
- 2025(E): Revenue KRW 11.02 Trillion (+7.0% YoY), Operating Profit KRW 833.3 Billion (+13.4% YoY, OPM 7.6%), Net Profit (Controlling) KRW 594.3 Billion (2H25 Operating Profit revised up by +9% vs. prev.).
- 2026(E): Revenue KRW 11.91 Trillion (+8.1% YoY), Operating Profit KRW 1.02 Trillion (+22.7% YoY, OPM 8.6%), Net Profit (Controlling) KRW 807.4 Billion.
- 2027(E): Revenue KRW 13.05 Trillion, Operating Profit KRW 1.20 Trillion (OPM 9.2%), Net Profit (Controlling) KRW 948.7 Billion.
- 3Q25 & 4Q25 Preview:
- 3Q25 Outlook: Projected Revenue of KRW 2.82 Trillion (+8.6% YoY, +1.3% QoQ) and Operating Profit of KRW 242.5 Billion (+4.7% YoY, +13.8% QoQ, OPM 8.6%).
- 4Q25 Outlook: Projected Revenue of KRW 2.67 Trillion (+7.3% YoY) and Operating Profit of KRW 177.2 Billion (+54.1% YoY, OPM 6.6%).
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (Utilization Upgrade & High-Value Mix Shift):
- 2H25 average capacity utilization raised to 90% (up from previous 85% estimate), maintaining high utilization despite capacity additions.
- Industrial MLCC revenue mix projected to expand from 18% in 2024 to 20% in 2025; automotive mix projected to reach ~29% (+4%p YoY).
- High-value product mix expansion is driving simultaneous price (P) and volume (Q) growth.
- Package Solution Division (51% FC-BGA Share & Big Tech Custom ASIC):
- 2025 division revenue projected to grow 9% YoY; FC-BGA revenue share within substrates projected to reach 51% (+4%p YoY) driven by server and network substrate demand.
- Direct beneficiary of custom ASIC demand driven by accelerating Big Tech AI infrastructure investments, supporting client diversification.
- Optics & Communication Division:
- 2025 revenue projected to grow approximately 3% YoY, with earnings rebound expected alongside flagship smartphone launches; smartphone market bottoming out creates potential upside to current estimates.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as transitioning from a legacy IT device supplier into an AI hardware growth player, capturing substantial benefits from expanding Big Tech custom ASIC investments and server infrastructure demand. The core perspective highlights that raising 2H25 MLCC utilization estimates to 90%, expanding industrial (20%) and automotive (29%) MLCC contributions, and lifting FC-BGA substrate mix to 51% will propel 2026 Operating Profit past the KRW 1 Trillion mark (KRW 1.02 Trillion), justifying the rollover of the valuation base to 2026 BPS and an upgrade in target price.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q3 and Q4 2025 Operating Profit of KRW 242.5 Billion and KRW 177.2 Billion respectively, confirming the 2H earnings upgrade; 2) maintaining 2H25 MLCC capacity utilization at ~90% while reaching target revenue shares for industrial (20%) and automotive (29%) MLCCs; and 3) sustaining FC-BGA’s revenue contribution at 51% within the substrate unit alongside commercial AI ASIC client wins to deliver 2026 Operating Profit of KRW 1.02 Trillion. These developments can be monitored through upcoming quarterly earnings announcements, official IR materials, regulatory filings, and corporate disclosures.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
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