Brokerage : Shinhan Securities
Analyst : Kangho Oh, Jibeom Seo
Investment Rating : BUY (Maintained)
Target Price : KRW 190,000 (Maintained)
Core Momentum : Expanding demand for high-value industrial/automotive MLCCs and server FC-BGA substrates drives solid 1Q earnings delivery and reinforces attractive valuation fundamentals.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained), Target Price maintained at KRW 190,000
- Valuation Methodology: Applied a target PBR multiple of 1.6x (5-year historical average from 2020 to 2024) to the 2025F BPS of KRW 119,162
- Valuation Status: Trading at a 2025F P/B of 1.0x, below the historical low average of 1.2x
- Earnings Forecast Revision: Upward revision in earnings forecasts
- Annual Earnings Forecasts (K-IFRS Consolidated):
- 2024A: Revenue KRW 10.294 Trillion / Operating Profit KRW 735.0 Billion / Net Profit (Controlling) KRW 679.1 Billion
- 2025F: Revenue KRW 10.889 Trillion / Operating Profit KRW 842.9 Billion / Net Profit (Controlling) KRW 632.9 Billion
- 2026F: Revenue KRW 11.806 Trillion / Operating Profit KRW 1.009 Trillion / Net Profit (Controlling) KRW 756.9 Billion
- 2027F: Revenue KRW 12.916 Trillion / Operating Profit KRW 1.178 Trillion / Net Profit (Controlling) KRW 887.4 Billion
- Key Valuation Multiples (2024A → 2025F → 2026F → 2027F):
- PER: 14.3x → 15.1x → 12.6x → 10.7x
- PBR: 1.1x → 1.0x → 1.0x → 0.9x
- EV/EBITDA: 5.9x → 4.2x → 3.7x → 3.3x
- ROE: 8.2% → 7.0% → 8.0% → 8.8%
- Dividend Yield (DY): 1.5% → 1.8% → 2.2% → 2.2%
- Quarterly Performance & Outlook:
- 1Q25 Review: Revenue KRW 2.739 Trillion (YoY +5%), Operating Profit KRW 200.5 Billion (YoY +9%, OPM 7.3%). Revenue exceeded brokerage estimates by +4%, with operating profit meeting expectations.
- 2Q25 Preview: Projected Revenue of KRW 2.739 Trillion, Operating Profit of KRW 216.8 Billion (OPM 7.9%).
🚀 2. [Market Opportunities & Business Outlook]
- Component (MLCC) Mix Optimization & Top-Line Growth:
- 1Q25 Component revenue surged +19% YoY, driven by broad-based demand growth across IT, industrial, and automotive segments supported by China’s trade-in subsidies.
- Component revenue share within the total company expanded to 44% in 1Q25 (+5%p YoY).
- 2025F Component annual revenue is forecast to grow +12% YoY. Within MLCC, industrial revenue share is expected to expand to ~20% (vs. 18% in 2024), and automotive share to 29% (vs. 25% in 2024).
- Package Solutions (FC-BGA) Server Substrate Expansion:
- 1Q25 Package division revenue rose +17% YoY. Substrate revenue is projected to grow +18% in 2024 and +12% in 2025F.
- FC-BGA revenue expansion continues, backed by increased shipments for server and network applications to global accounts.
- FC-BGA revenue share within the package substrate division is projected to reach 51% (+4%p YoY) in 2025.
- Annual Revenue Projections by Business Division (2025F → 2026F):
- Component: KRW 5.007 Trillion → KRW 5.362 Trillion
- Substrates: KRW 2.286 Trillion → KRW 2.699 Trillion
- Modules (Optics): KRW 3.597 Trillion → KRW 3.745 Trillion
- Portfolio Diversification & Valuation Appeal:
- Although the stock has corrected 18% from its 2025 highs due to macro tariff and growth concerns, valuation re-rating potential remains solid driven by AI expansion and rising custom ASIC demand.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a generic component supplier vulnerable to macro tariff concerns and broader consumer set demand slowdowns, but as an advanced electronic component enterprise validating its core earnings resilience through structural mix enhancements in industrial/automotive MLCCs and server FC-BGA substrates. Greater significance is attached to customer portfolio diversification aligned with the expanding AI and custom ASIC ecosystems, alongside attractive valuation support near historical P/B lows (2025F P/B 1.0x), rather than short-term macro noise.
To verify whether this investment thesis materializes going forward, investors should monitor whether the industrial (~20%) and automotive (29%) revenue targets in MLCC are achieved in 2025, whether FC-BGA revenue share successfully expands to 51% within the substrate division to drive margin gains, and whether quarterly operating profit momentum continues as projected into 2Q25 (KRW 216.8 Billion). These developments can be tracked through upcoming quarterly earnings releases, official IR materials, and regulatory filings.
📢 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.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
