"Another 3 Million Won Target"... Why Securities Firms Are Re-Evaluating Samsung Electro-Mechanics [Click e-Stock]

Kyobo Securities Raises Target Price for Samsung Electro-Mechanics to 3 Million Won
"Q2 Operating Profit Expected to Exceed Market Expectations"
Shinhan, Meritz, iM, Hana, and Others Also Raise Targets

Amid a series of target price upgrades for Samsung Electro-Mechanics by securities firms in Yeouido, Kyobo Securities also announced on July 6 that it has raised its target price from 1.2 million won to 3 million won, while maintaining its “Buy” investment rating.

Kyobo Securities estimated Samsung Electro-Mechanics’ second-quarter sales at 3.4084 trillion won (up 22.4% year-on-year) and operating profit at 411 billion won (up 93.0%). This surpasses the market consensus for operating profit, which stood at 382 billion won.

Samsung Electro-Mechanics Suwon Plant.

Kyobo Securities researcher Choi Boyoung stated, “This marks a phase where the profit growth cycle, confirmed in the first quarter, is accelerating further. The operating profit margin (OPM) is expected to reach 12.1%, entering double digits.” She explained, “We estimate that the expansion of high-value multilayer ceramic capacitor (MLCC) supply for AI servers, price hikes for flip chip ball grid array (FC-BGA), and favorable exchange rates have driven profit growth.”

By segment, she offered a positive outlook for the component business, highlighting the surging demand for ultra-small and high-capacity MLCCs for AI servers, expansion of shipments and price increases, as well as a product mix improvement centered on high-value applications such as servers and automotive electronics. She also predicted that the operating leverage effect, based on high utilization rates, will drive profit growth.

For the package solutions segment, she projected that it would see the largest profit growth among all business units, thanks to a tight supply-demand environment for AI semiconductors, price increases centering on server-use FC-BGA, and mix improvements stemming from a higher proportion of sales for server and network applications. While the optical communication solutions segment is expected to see a quarter-on-quarter profit decline due to seasonal weakness, the year-on-year improvement trend is likely to continue.

Choi added, “The recently disclosed large-scale MLCC supply contract is an unusual case of a client securing its annual volume in advance, signaling a structural supply shortage of MLCCs for AI servers and a shift in supply-demand power toward suppliers. With the company reportedly operating at full capacity, price hikes stemming from shifts to high-value lines are expected to spread across all product categories. The recently disclosed silicon capacitor supply contract will serve as a new growth driver for the substrate business. In the second half, improvement in volume, price, and mix are expected to overlap, leading to increasing profit growth with each successive quarter.”

Meanwhile, securities firms in Yeouido have recently been raising their target prices for Samsung Electro-Mechanics. Shinhan Investment, Meritz Securities, iM Securities, NH Investment & Securities, Hana Securities, and KB Securities have all raised their target prices to 3 million won, while Daol Investment & Securities and Hyundai Motor Securities have suggested a target of 2.8 million won.

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