Samsung Electro-Mechanics Target Price: 1.4 Million Won vs 3 Million Won... Which Is Correct?

Samsung SDI, Samsung Life Insurance, Hyundai Mobis and Others
Securities Firms Offer Polarized Analyses on Same Companies
Significant Divergence in Outlook on Business Conditions and Earnings
Investor Caution Advised Amid Market Volatility

Recently, there have been instances where target stock prices have nearly doubled within just a few days or weeks. This phenomenon is a result of stark differences in outlook among securities firms when analyzing the same stocks and forecasting future industry conditions and earnings.

According to financial information provider FnGuide on June 17, a review of reports on the top 20 KOSPI and KOSDAQ stocks by market capitalization published over the past month (from May 15 to June 15) showed that the largest target price discrepancies among securities firms were found in KOSPI-listed Samsung Electro-Mechanics (114.2%), Samsung SDI (88.3%), and Samsung Life Insurance (79.8%). On the KOSDAQ, HPSP (34.9%), PSK (29.3%), and Simmtech (26.6%) showed relatively large gaps as well.

For Samsung Electro-Mechanics, which had the highest discrepancy, the difference in target prices among securities firms increased by as much as 1.6 million won in just over ten days. On May 21, iM Securities raised its target price from 1.1 million won to 1.4 million won, highlighting news that Samsung Electro-Mechanics had signed a long-term supply agreement (LTA) worth 1.057 trillion won for silicon capacitors with major global enterprises.

On June 1, DB Securities went even further, labeling the outlook as an "unprecedented boom phase." They noted that aggressive, large-scale capacity expansions totaling 7.6 trillion won over two years were being backed by already committed demand. DB Securities also cited the overwhelming production capacity gains from introducing new-generation substrates (100 by 100, 24-layer) and proactive procurement by global clients, which they believe provides visibility beyond 2028. Consequently, they applied a 15% premium to the multiple of Ibiden, the leading global substrate maker from Japan, and drastically raised their target price from 1.6 million won to 3 million won.

Samsung SDI, which ranked second in terms of target price disparity, also witnessed diverging views within a week. On May 26, Mirae Asset Securities maintained its target price of 1 million won and reiterated its top pick rating for the sector. In contrast, LS Securities lowered its target price to 531,000 won on June 5. Mirae Asset Securities emphasized the harmony of financial strength, market share, and earnings, analyzing that Samsung SDI could secure up to 15 trillion won in potential liquidity through a sale of its stake in Samsung Display. They also stated that by securing high-quality orders in the lithium iron phosphate (LFP) prismatic battery segment—previously dominated by Chinese competitors—Samsung SDI was entering the early stages of recovering its mid- to long-term market share.

On the other hand, LS Securities cited "weak electric vehicle (EV) battery sales in April" as grounds for ongoing concerns about negative growth. They pointed out that despite a favorable environment with increasing global market share for prismatic form factors, Samsung SDI's global prismatic market share plummeted from 12% in 2020 to just 2% from January to April this year, reaffirming the company's competitive disadvantage against Chinese prismatic battery makers.

For Samsung Life Insurance, which had the third-largest discrepancy, Daishin Securities set a target price of 278,000 won on May 18, while Shinhan Investment & Securities suggested 500,000 won on the same day. Daishin Securities acknowledged a first-quarter consolidated net profit of 1.2 trillion won—an earnings surprise—but maintained its "market perform" rating. They noted that, thanks to valuation gains from Samsung Electronics' rising stock price, controlling shareholder equity increased by 29.5% year-on-year to 81.2 trillion won, but added that the company lacks a concrete capital utilization plan. They also analyzed that even the anticipated capital inflow from a large special dividend by Samsung Electronics was already reflected in the stock price.

Shinhan Investment & Securities, meanwhile, identified Samsung Life Insurance as a beneficiary of the semiconductor rally. They calculated a fair corporate value of 104 trillion won by combining Samsung Electronics' equity value (73 trillion won with a 50% discount) and the value of its core business (30 trillion won). They also observed that the discount rate compared to fair value, which once reached 54%, has recently narrowed to 36%, and that rising market interest rates are further reducing the discount factor. In addition, they projected that if a special dividend from Samsung Electronics is factored in, Samsung Life Insurance's return on equity (ROE) could rise to 8.7% by 2027.

Lee Hyoseop, a research fellow at the Korea Capital Market Institute, commented, "When stock prices rise sharply, securities firms sometimes chase momentum and raise their target prices. Only optimistic scenarios are being reflected, so investors should exercise caution amid heightened market volatility."

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