“Undervalued despite an unprecedented boom”... Samsung Electro-Mechanics’ target price set at 3 million won

[Financial News] On the 2nd, KB Securities maintained its Buy rating and target price of 3 million won for Samsung Electro-Mechanics, saying the industry outlook was undervalued.
Lee Chang-min, an analyst at KB Securities, analyzed: “The strong improvement in the product mix was behind Samsung Electro-Mechanics’ impressive results in the third quarter despite a sharp drop in exchange rates.” He added: “Average selling prices (ASPs) for key products for AI servers, including multilayer ceramic capacitors (MLCCs) and flip-chip ball grid arrays (FCBGAs), continue to rise amid tight supply and demand. Their share of revenue is also expanding significantly, leading to a sharp improvement in profitability.”
Samsung Electro-Mechanics recorded revenue of 3.76 trillion won and operating profit of 691 billion won in the third quarter. The figures were up 30% and 166%, respectively, from a year earlier, exceeding consensus.
KB Securities forecast that Samsung Electro-Mechanics would record revenue of 4 trillion won and operating profit of 902.4 billion won in the fourth quarter, far exceeding consensus. It expected the AI-driven supercycle to shield the company from the effects of the seasonal off-season.
The analyst said: “Key components for AI, including MLCCs and FCBGAs, are enjoying an unprecedented boom.” He added: “Given the extremely tight supply and demand, further improvement in industry conditions and continued upward revisions to consensus are expected.”
He added: “In particular, MLCCs are expected to deliver strong results with certainty, underpinned by the long-term supply agreements (LTAs) signed this year.” He also said: “LTA-based sales are expected to account for 70% of annual revenue, and the company will hold the No. 1 market-share position in the market for MLCCs used in AI servers.”

[email protected] Seo Min-ji Reporter