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NH Raises Samsung Electro-Mechanics Target Price to 1,000,000 Won
"Upward Revision in Earnings Estimates Due to Expanded CAPEX"

On May 5, NH Investment & Securities raised its target price for Samsung Electro-Mechanics from 600,000 won to 1,000,000 won, while maintaining its "Buy" investment rating, citing the company's expanded capital expenditures (CAPEX).

Samsung Electro-Mechanics Suwon Plant.

Ji-Hyun Hwang, a researcher at NH Investment & Securities, stated, "Samsung Electro-Mechanics has decided to make aggressive capital investments to respond to strong demand for high-density package substrates (FC-BGA, which connect semiconductor chips and motherboards) and high-capacity, high-voltage multilayer ceramic capacitors (MLCCs)." She added, "Upward revisions to earnings estimates based on these decisions are the primary reason for the target price adjustment."

Samsung Electro-Mechanics has previously announced plans to more than double its CAPEX compared to last year (1.192 trillion won). Hwang estimated, "Most of the investment will be allocated to FC-BGA substrate equipment, and since the expansion is based on customer requests, the investment amount is structured to be compensated afterward, either through utilization guarantees or support payments." She further noted, "Given downstream demand, this investment trend is likely to continue for the next three years." Accordingly, NH Investment & Securities forecasts FC-BGA substrate sales will grow from approximately 1 trillion won last year to over 5 trillion won by 2030.

Demand for MLCCs is also expanding, particularly for high-end products, as the company discusses long-term supply agreements (LTAs) with major big tech companies. Samsung Electro-Mechanics is responding to market changes with three main product lines: ultra-compact, high-capacity MLCCs for AI accelerators; high-voltage and vertical power delivery (VPD)-based embedded MLCCs for 800V systems; and ultra-high-capacity, high-temperature MLCCs for 800G and 1.6T network applications.

Samsung Electro-Mechanics also exceeded market expectations in its first-quarter results. Sales in the first quarter reached 3.2091 trillion won (+17.2% year-on-year), and operating profit was 280.6 billion won (+39.9%). Hwang noted, "Excluding one-off costs of 71.4 billion won, results surpass consensus," adding, "Production of switch substrates for big tech clients, which was expected to begin in the second half, is now anticipated to start early in the second quarter, so the operating margin for the FC-BGA division is expected to exceed 20%."

This content was produced with the assistance of AI translation services.