"Samsung Electro-Mechanics Raises Target Price to 2 Million Won on MLCC Price Hikes; SK Innovation Wins First U.S. ESS Order" [Jutopia]

[Financial News] Here is a roundup of major brokerage reports as of the morning of September 1.
SK Innovation received a mixed assessment after its battery subsidiary SK On won its first order in the U.S. ESS market, but analysts said it was still not enough to offset investor disappointment over the decision to merge with SKIET.
Samsung Electro-Mechanics had its target price raised to 2 million won on expectations that earnings growth will continue as prices for multilayer ceramic capacitors (MLCC) and semiconductor substrates (FC-BGA) keep rising. BH, which supplies flexible printed circuit boards (FPCB) for displays to Apple and Samsung Electronics, was also named a beneficiary of Apple's first foldable phone, set to be unveiled this month.
◆ SK Innovation (096770)― iM Securities / Researcher Jeon Yu-jin
- Target price: 190,000 won (unchanged) | Previous close: 125,500 won
- Investment opinion: Buy (unchanged)
iM Securities said SK Innovation's battery subsidiary SK On winning its first order in the U.S. ESS market is encouraging, but it is still difficult to offset investor disappointment over the SKIET merger decision. The brokerage kept its target price at 190,000 won.
SK On said the previous day that it signed a contract with U.S. ESS specialist NeoVolta to supply 9 gigawatt-hours (GWh) of lithium iron phosphate (LFP)-based ESS systems. The deal is estimated at around 150 billion won, and the units will be produced at its Georgia plant and delivered over five years starting in 2027.
Researcher Jeon Yu-jin said, "As the slowdown in the electric vehicle market delayed profitability improvement at SK On, the company highlighted ESS as an alternative, but progress lagged behind rivals. In the meantime, the announced SKIET merger decision increased the burden of supporting the subsidiary, sending the stock price sharply lower." She added, "This contract is not enough to fully ease market frustration and anxiety over support for SK On and SKIET, but it is encouraging as the company has taken its first step into the U.S. ESS market."
With this order, SK On has secured about 45% of its annual U.S. ESS order target of 20 GWh. If an additional 9 GWh contract under discussion this year is finalized, it will meet most of its goal.
Jeon said, "As orders for major non-Chinese manufacturers are surging and additional response capacity is limited, SK On, which has spare production capacity, is benefiting from the spillover effect." She explained that as the U.S. pushes to reduce reliance on China, orders are flowing to battery makers outside China, and some of that volume is reaching SK On, which still has room to produce.※ Energy Storage System (ESS)A system that stores electricity in batteries and releases it when needed. It helps smooth out intermittent power from solar and wind, and its use is also expanding rapidly as backup equipment for power-hungry artificial intelligence data centers.※ Lithium iron phosphate battery (LFP)A battery that uses iron as the cathode material. It is cheaper than nickel-based batteries and less prone to fire, so it is widely used in ESS, where price and safety matter more than driving range.
◆ Samsung Electro-Mechanics (009150)― DB Securities / Researcher Jo Hyun-ji
- Target price: 2 million won (raised 33.3% from 1.5 million won) | Previous close: 1,458,000 won
- Investment opinion: Buy (unchanged)
DB Securities raised its target price for Samsung Electro-Mechanics to 2 million won, saying earnings growth is likely to continue thanks to higher selling prices for multilayer ceramic capacitors (MLCC) and flip chip ball grid array (FC-BGA) semiconductor package substrates.
Researcher Jo Hyun-ji explained, "MLCC prices for IT distribution channels have risen by an average of about 30%, and direct IT sales volumes are also being negotiated individually at a similar level since June."
The industry is also heating up. As original design manufacturers continue to build inventories, new order volumes at Japan's Murata and Taiyo Yuden have again hit record highs. DB Securities expects Samsung Electro-Mechanics' operating profit in the third quarter to reach 621 billion won, above market expectations.
Jo said, "Both MLCC and FC-BGA face clear supply constraints and technical barriers, so there is a high likelihood of further price increases." She added, "We maintain our view that the company has a relative advantage even within the electronics sector, as growth led by the component division and package solutions remains solid." The analysis suggests that because only a limited number of companies can make these parts, Samsung Electro-Mechanics holds pricing power as the supplier.※ Multilayer Ceramic Capacitor (MLCC)A tiny component that stabilizes current in circuits by storing electricity and releasing only what is needed. Hundreds to thousands are used in a single smartphone, and tens of thousands in AI servers, earning it the nickname "the rice of the electronics industry."※ Flip Chip Ball Grid Array (FC-BGA)A high-value-added substrate that connects semiconductor chips to the main board. Because the chip is flipped and attached with tiny solder balls, it enables faster signals and better heat dissipation, making it a key component in high-performance semiconductors such as AI CPUs and GPUs.
◆ BH (090460)― Daishin Securities / Researcher Park Kang-ho
- Target price: 41,000 won (unchanged) | Previous close: 18,230 won
- Investment opinion: Buy (unchanged)
Daishin Securities kept its buy rating and target price of 41,000 won for BH, saying it expects the company to benefit from Apple's first foldable phone launch and its expansion into robotics.
Researcher Park Kang-ho said Apple's new foldable phone is expected to be unveiled on September 10 Korea time and then released sequentially from late September. He added that Samsung Electronics' Galaxy Z Fold 8 has seen strong sales in the second half, so Apple's similar foldable phone is also likely to draw attention.
Park said, "Although the price is expected to be higher than previous iPhone models due to rising memory prices, foldable phone sales could exceed expectations from the perspective of a new lineup and a stronger AI strategy." In other words, even with a high price tag, the novelty of Apple's first foldable and enhanced AI features could drive strong demand.
Other positive factors include Samsung Display's recent announcement that it will resume capital investment, which points to further expansion in the foldable phone market from next year, and expectations that BH will add new North American customers in its robotics and humanoid business.
Daishin Securities said BH's estimated 2026 price-earnings ratio is 5 times, which is near a historic low. Park said, "We expect a stock price rebound in September, reflecting strong earnings and business diversification efforts."※ Flexible Printed Circuit Board (FPCB)A circuit board that is thin like paper and can bend freely. Unlike rigid conventional boards, it can be folded or rolled, so it is essential in foldable phones and in smartphones and robots that need densely packed components in tight spaces.

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