Brokerage : Yuanta Securities
Analyst : Seon-myung Ko
Investment Rating : BUY (Maintained)
Target Price : KRW 230,000 (Raised)
Core Momentum : Multi-year earnings expansion and target price upgrade driven by solid automotive growth, application diversification into AI/general servers, expanding server mix in FC-BGA, and sustained operational leverage.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY maintained; Target Price raised by 15.0% from KRW 200,000 to KRW 230,000 (19.0% upside potential / 18.9% in calculation table), derived by applying a target P/B multiple of 1.9x (2025 average P/B of global peers: Murata, Taiyo Yuden, TDK, Yageo) to the 12MF BPS forecast of KRW 119,918.
- Base Share Price (As of Sep 30, 2025): KRW 193,500 (Market Cap: KRW 14.45 Trillion, Shares Outstanding: 77.60M, 60-Day Avg Turnover: KRW 77.4 Billion, Foreign Ownership: 37.39%, Dividend Yield: 1.45%).
- Valuation Multiples & Trend:
- PER: 2024: 15.6x → 2025(E): 22.9x → 2026(E): 15.7x
- PBR: 2024: 1.2x → 2025(E): 1.6x → 2026(E): 1.6x
- EV/EBITDA: 2024: 6.7x → 2025(E): 8.2x → 2026(E): 7.3x
- ROE: 2024: 8.2% → 2025(E): 7.2% → 2026(E): 10.2%
- Earnings Forecast Summary (Post-Revision):
- 2025(E): Revenue KRW 11.13 Trillion, Operating Profit KRW 843.0 Billion (OPM 7.6%), Pre-tax Profit KRW 830.0 Billion, Net Profit (Controlling) KRW 638.0 Billion, EPS KRW 8,221.
- 2026(E): Revenue KRW 12.16 Trillion (+2.6% vs. prev.), Operating Profit KRW 1.10 Trillion (+3.4% vs. prev., OPM 9.1%), Net Profit (Controlling) KRW 925.0 Billion, EPS KRW 11,920.
- 3Q25 Preview (Post-Revision):
- Projected Revenue of KRW 2.85 Trillion (+9.8% YoY, +2.4% QoQ) and Operating Profit of KRW 247.7 Billion (table: KRW 248.0 Billion, +7.1% YoY, +16.5% QoQ, OPM 8.7%), beating market consensus (Operating Profit of KRW 242.0 Billion).
🚀 2. [Market Opportunities & Business Outlook]
- Component Division (MLCC Technical Moat & Shipment Growth):
- Product portfolio shifting away from legacy IT toward automotive and server applications; high-value MLCC supply capability remains concentrated in Korea (Samsung Electro-Mechanics) and Japan (Murata).
- Server demand momentum expanding from AI-dedicated servers to general-purpose servers, concentrating benefits on top-tier suppliers.
- Alongside product mix improvements, MLCC shipment volume continues to grow while inventory days remain around the normal 4–6 week range with resilient underlying demand.
- Capacity utilization supported by recovering global EV demand (notably European markets) remains a key metric to monitor.
- Package Solution Division (FC-BGA Server Share Overcoming PC):
- Initiated AI accelerator substrate supplies to a North American CSP; server share within total substrate applications has begun surpassing traditional PC exposure.
- While H2 AI accelerator delivery volumes remain modest, demand for general server and networking substrates remains robust.
- Medium-to-Long Term Server Momentum:
- Server MLCC demand represents a core future growth driver; however, as server exposure currently accounts for under 20% of MLCC revenues, the full earnings impact is projected to materialize in 2026 rather than H2 2025.
📝 Editor’s Comment (Perspective)
The covering analyst views Samsung Electro-Mechanics as a company anchoring near-term performance in solid automotive demand while sequentially expanding exposure to AI and general-purpose servers across its MLCC and FC-BGA product portfolios. The core perspective highlights that resilient server demand within normal 4–6 week MLCC inventory levels, FC-BGA server revenues surpassing legacy PC applications, and anticipated server-driven MLCC volume acceleration in 2026 justify applying a target multiple of 1.9x (2025 peer average P/B) to projected book value.
To verify whether this investment thesis materializes, key trackable checkpoints include: 1) achieving Q3 2025 Operating Profit in the KRW 247.0–248.0 Billion range to confirm consensus beat; 2) sustaining FC-BGA server substrate revenue above the PC revenue contribution within the Package division; and 3) the acceleration of server-oriented MLCC demand and high automotive utilization driving 2026 annual Operating Profit to KRW 1.10 Trillion. These developments can be monitored through upcoming quarterly earnings releases, official IR materials, regulatory filings, and corporate disclosures.
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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