“Samsung Electro-Mechanics’ earnings outlook is rising, but its stock price can’t keep up”

[Financial News] IBK Investment & Securities said on the 20th that it expects Samsung Electro-Mechanics’ earnings improvement to continue, and maintained its “Buy” rating and target price of 1.75 million won.
Kim Un-ho, an analyst at IBK Investment & Securities, said, “Samsung Electro-Mechanics is expected to post third-quarter revenue of 3.8 trillion won and operating profit of 666.8 billion won, exceeding forecasts. We have raised our full-year revenue and operating profit forecasts for this year to 14.46 trillion won and 2.19 trillion won, respectively, from our previous estimates, and have also raised our operating profit forecasts for 2027 and 2028.”
He added, “The package and components divisions are seeing simultaneous improvements in revenue and profitability, driven by product mix and price increases, and investment is also expected to boost production capacity.”
The recent weakness in the share price was attributed to concerns about AI investment. The explanation was that uncertainties such as rising interest rates and the view that AI has peaked had been priced into the stock despite supply shortages driven by strong demand.
Kim said, “Orders related to MLCCs disclosed by Samsung Electro-Mechanics in the second half of this year total 4 trillion won when silicon capacitors are included, while next year’s MLCC volume alone is around 2.4 trillion won. I believe this is an indicator confirming a supply shortage, and investment disclosures on package substrates have also pointed to a supply shortage.”
He analyzed, “The fact that the timing is after 2028 is even more encouraging, as it runs counter to the recent view that memory demand will peak next year. However, uncertainty over the sales outlook is increasing due to rising interest rates and slowing growth prospects for large AI models.”

[email protected] Seo Min-ji Reporter