Not SK hynix?... This Stock Is Seen Rising to 3 Million Won Despite a Sharp Drop

[Financial News] Samsung Electro-Mechanics has surged more than 400% so far this year, yet securities firms are still maintaining target prices of up to 3 million won in August. The shortage of multilayer ceramic capacitors (MLCC) and flip chip ball grid arrays (FC-BGA) is pushing up prices, and earnings forecasts continue to rise.
According to the Korea Exchange on the 24th, Samsung Electro-Mechanics closed at 1,318,000 won on the Korea Exchange Main Board, up 0.46% from the previous session. Compared with the Jan. 2 reference price of 255,000 won, the stock has gained 416.86% this year.
Target prices from securities firms remain at elevated levels. Kyobo Securities maintained a "buy" rating on Samsung Electro-Mechanics and kept its target price at 3 million won on the day. Mirae Asset Securities also held its target price at 2.8 million won on the 21st. On the 11th, Hana Securities set a target price of 3 million won, while Yuanta Securities Korea set one at 2.3 million won.
The key factor supporting recent target prices is the rise in prices for MLCCs and FC-BGAs. Choi Bo-young, a researcher at Kyobo Securities, analyzed that "the market has entered a phase in which the pace of MLCC demand growth structurally outpaces supply expansion."
Samsung Electro-Mechanics has kept the share of long-term supply agreements (LTA) limited while raising distributor price increases from 10% to 30%. This has helped secure volume stability while also creating room for further increases in the average selling price (ASP).
The FC-BGA market is also remaining supplier-driven. Expansion plans based on customer prepayments are in the final stages. As customers pay advances to secure future production capacity, the move is expected to support utilization rates, prices and profitability going forward.
Choi said, "Both MLCCs and FC-BGAs have shifted into markets where customers prioritize supply security over price," adding that "Samsung Electro-Mechanics' bargaining power has structurally improved compared with past cycles." He projected this year's sales at 14.3594 trillion won and operating profit at 1.9478 trillion won. Operating profit would be up 113.5% from a year earlier.
Earnings forecasts are being revised higher again. Mirae Asset Securities raised its operating profit estimate for Samsung Electro-Mechanics this year to 2.036 trillion won on the 21st, up 7% from its previous forecast. It expects the impact of the 30% price increase across all distributor-facing product lines, implemented on the 1st, to begin showing from the third quarter and to be fully reflected in the fourth quarter.
It also expects profit growth to accelerate further from next year onward. Mirae Asset Securities forecast operating profit to rise from 2.036 trillion won this year to 4.475 trillion won in 2027 and 6.917 trillion won in 2028. Its 2027 and 2028 forecasts are 16% and 19% above market consensus, respectively.
Valuation concerns remain. Mirae Asset Securities estimated this year's price-earnings ratio (PER) at 63.2 times. However, based on next year's expected earnings, the PER would fall to 29.4 times, while return on equity (ROE) would rise from 16.6% this year to 28.7%.
Park Joon-seo, a researcher at Mirae Asset Securities, said, "The current valuation is burdensome, but earnings are improving quickly," adding, "As earnings forecasts continue to be revised upward, the high valuation may gradually become justified."
[email protected] Choi Du-seon Reporter