Brokerage : Yuanta Securities
Analyst : Sunyoung Kou (Research Assistant: Seokmin Lim)
Investment Rating : BUY (Maintained)
Target Price : KRW 2,300,000 (Lowered)
Core Momentum : Solid earnings growth driven by AI server LTA executions, broadening MLCC channel price hikes, and expanding FC-BGA operating margins
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained) / Target Price KRW 2,300,000 (Lowered from KRW 2,800,000) (Closing price KRW 879,000 as of July 30, 2026; upside potential 162%)
- Valuation Basis: Applied Target PER of 66.1x to 2027(E) EPS (reflecting narrowed valuation premium due to broader equity market weakness)
- Key Financial Metrics & Forecast:
- Revenue (KRW): 2024 KRW 10.294 Trillion → 2025 KRW 11.314 Trillion → 2026(E) KRW 14.354 Trillion → 2027(E) KRW 18.379 Trillion
- Operating Profit (KRW): 2024 KRW 735.0 Billion → 2025 KRW 913.0 Billion → 2026(E) KRW 1.962 Trillion → 2027(E) KRW 3.673 Trillion
- Net Profit (Controlling) (KRW): 2024 KRW 679.0 Billion → 2025 KRW 706.0 Billion → 2026(E) KRW 1.412 Trillion → 2027(E) KRW 2.594 Trillion
- PER / PBR / ROE:
- 2024: PER 15.6x, PBR 1.2x, ROE 8.2%
- 2025: PER 17.5x, PBR 1.3x, ROE 7.7%
- 2026(E): PER 46.7x, PBR 5.3x, ROE 12.8%
- 2027(E): PER 25.4x, PBR 4.2x, ROE 18.4%
- 2Q 2026 Preliminary Results (2Q26P):
- Revenue: KRW 3.457 Trillion (+24.2% YoY, +7.7% QoQ, beating consensus by +4.3%)
- Operating Profit: KRW 440.0 Billion (+106.8% YoY, +57.0% QoQ, OPM 12.7%, beating consensus by +8.5%)
- Net Profit (Controlling): KRW 313.0 Billion (+141.2% YoY, +25.6% QoQ)
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Performance & Segment Trends:
- Component (MLCC): Solid results achieved via product mix improvements and ASP expansion, supported by multiple LTA executions for AI server and data center applications.
- Package (FC-BGA): Notable operating leverage confirmed through ASP increases and a higher revenue share from server-oriented substrates.
- Optics: Mobile camera modules experienced seasonal soft demand, while automotive modules remained defensive.
- MLCC Segment (Capacity Constraints & Price Hikes):
- Channel Price Adjustments: Following a 10% price hike on low-end PC MLCCs in May, a broad 30% price hike across all product categories in distribution channels was announced in July.
- Supply-Demand Dynamic: Line conversion toward server-grade MLCCs is cannibalizing commodity capacity, exacerbating structural supply shortages and indicating that price hikes will likely follow a sequential, sustained path rather than a one-off event.
- Peer Trend: Competitors like Yageo confirmed robust Q2 demand across all product segments including AI servers, expanding LTA discussions, and suggesting potential further price hikes following initial cost-pass-through adjustments.
- Mid-to-Long Term Drivers:
- Continued momentum from additional capacitor order wins and favorable price environments.
- Substrate-centric large-scale CapEx expansion partially backed by customer prepayments, strengthening long-term cycle visibility.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a company whose core fundamentals are deteriorating alongside broader market weakness, but as a top-pick component leader whose earnings momentum is strengthening through server-driven demand and tight industry supply. While the target price was revised downward to account for compressed market valuation multiples, the underlying perspective places primary emphasis on the durability of fundamental drivers—specifically sequential MLCC price hikes triggered by capacity cannibalization and expanding high-value server LTAs.
To assess whether this investment thesis continues to materialize, key monitoring points include the sequential transmission of channel price hikes into broader product categories and direct contract ASPs, the persistence of margin leverage in the package division driven by server FC-BGA mix expansion, and concrete disclosures regarding customer-prepayment-funded substrate CapEx. These factors can be verified through upcoming quarterly earnings announcements, investor relations Q&A materials, and official regulatory filings.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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