From 250,000 won to 2.2 million won: Foreign investors are still buying this stock, saying it is cheap

[Financial News] If there is one stock that has stood out as the hottest name in the domestic market this year, it is Samsung Electro-Mechanics. Its share price, which hovered in the 200,000-won range at the start of the year, surged nearly eightfold to top 2 million won in June. That marks a gain of more than 700% from the beginning of the year, making it one of the KOSPI Composite Index's best-performing stocks and outpacing major semiconductor names such as SK hynix.

Foreign investors have been behind the stock's sharp rally. According to the Korea Exchange on June 30, Samsung Electro-Mechanics was the most heavily bought stock by foreigners on the KOSPI Composite Index between June 1 and June 30. During that period, foreign investors posted a net purchase of 241.56 billion won in Samsung Electro-Mechanics shares. More than 2 trillion won in foreign buying flowed into a single stock in just one month. The scale was far larger than the second-place LEENO Industrial Inc., which saw 49.39 billion won in net buying, and Doosan, which ranked third with 38.52 billion won.
What stands out is that Samsung Electro-Mechanics went through a correction in June. After rising more than 300% in just three months from March through May, the stock briefly fell to the 1.9 million won range on concerns about overheating. Even so, foreign investors treated the pullback as a buying opportunity and increased their net purchases. In contrast, institutions took profits after the sharp rally and became the biggest net sellers of Samsung Electro-Mechanics during the same period, moving in the opposite direction.
The stock moved even higher that day. It jumped 7.16% from the previous session and reclaimed the 2.2 million won level. The rally was fueled by a disclosure that the company had signed a 454 billion won supply contract for multilayer ceramic capacitors (MLCC) with a global major company. The contract is equivalent to 4.0% of last year's sales, and the term runs from January through December next year. Foreign investors also bought a net 42.29 billion won worth of Samsung Electro-Mechanics shares that day, ranking first in overall market net purchases. That meant foreign buying was dominant not only over the month, but also on that single day.

The reason foreign investors are betting on Samsung Electro-Mechanics is the spread of AI infrastructure. The company's key growth engines are MLCC and Flip-Chip Ball Grid Array (FC-BGA) substrates. MLCCs store and supply electricity and are used in nearly all electronic devices. But AI servers require far more power and data processing than conventional servers, so the number of MLCCs used rises to more than twice the usual level. FC-BGA is an advanced substrate that connects AI accelerators and GPUs from NVIDIA and AMD. As competition in AI semiconductors intensifies, demand for these substrates is expected to surge. Both products have high technological barriers, creating a structure in which supply cannot keep up with demand growth.
A new growth driver, the silicon capacitor (Si-CAP) business, is also gaining momentum. Samsung Electro-Mechanics is reportedly securing large-scale supply contracts in the silicon capacitor segment for next-generation packaging. Because only a limited number of companies can mass-produce these components, expectations are high for additional orders. Park Kang-ho, an analyst at Daishin Securities, said, "Silicon capacitors are a fabless business with relatively low investment burden, and they also offer higher profitability than other products, so it is significant that they add a new growth factor."
Earnings forecasts are also being raised quickly. The market expects Samsung Electro-Mechanics' operating profit to rise into the 2 trillion won range next year and reach the 4 trillion won range by 2028. Based on that outlook, some brokerages have set a target price as high as 3 million won. DB Securities said, "An unprecedented boom has arrived," and nearly doubled its target price from 1.6 million won to 3 million won. Mirae Asset Securities set it at 2.8 million won, Hyundai Motor Securities at 2.3 million won, and KB Securities at 2.2 million won.
Yang Seungsoo, an analyst at Meritz Securities, said, "Competition is now intensifying among end customers to secure MLCC volumes for AI servers through long-term agreements (LTAs)." He added, "This contract is not a simple price negotiation, but a strategic deal to secure core components stably, and it is a very favorable structure for Samsung Electro-Mechanics."
Still, valuation pressure remains a concern, with the price-to-earnings ratio (PER) exceeding 200 times. As of that day, Samsung Electro-Mechanics' PER stood at 233.71. Analysts say the stock's future direction will depend on how long the AI investment cycle lasts and whether the effects of MLCC price increases and FC-BGA capacity expansion are reflected in actual earnings.

[email protected] Han Young-jun Reporter