[Featured Stock] Samsung Electro-Mechanics Jumps 14% on Hopes of MLCC Price Hike

Samsung Electro-Mechanics is on an upward trend after Japan's Murata Manufacturing hinted at a possible price hike for multilayer ceramic capacitors (MLCCs) used for artificial intelligence (AI).

As of 9:20 a.m. on the 19th, Samsung Electro-Mechanics was trading at 352,000 won, up 14.05% (43,500 won) from the previous trading day.

In a report released the same day, Meritz Securities stated, "In the case of Samsung Electro-Mechanics' Component Division, the ratio of material costs to sales is in the low-to-mid 20% range, and the business structure is characterized by a relatively high fixed-cost burden," adding, "Changes in utilization rates generate strong operating margin leverage, and in fact, over the past 10 years, the operating margin of the Component Division has shown a high correlation with MLCC utilization rates."

Yang Seungsoo, an analyst at Meritz Securities, said, "The current share price is at about 2.3 times price-to-book ratio (PBR) based on consensus, and if price hikes for AI MLCCs materialize, there is room for multiple expansion along with an improvement in ROE," adding, "Considering the recent re-rating trend of AI hardware-related stocks and the overall re-rating phase among global ABF substrate makers, the possibility of entering a valuation range above past peak levels also remains open."

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