Samsung Electro-Mechanics sees explosive demand for MLCCs and FCBGAs continuing... target price: 3 million won - KB Securities

[Financial News] KB Securities said it expects Samsung Electro-Mechanics to achieve medium- to long-term earnings growth on the back of demand for key components for artificial intelligence (AI), including multilayer ceramic capacitors (MLCCs) and flip-chip ball grid arrays (FCBGAs). It maintained its target price at 3 million won and its rating at “Buy.”
According to industry sources on the 3rd, Lee Chang-min, a researcher at KB Securities, said in a recent report, “Samsung Electro-Mechanics’ revenue for the third quarter of this year rose 30% year over year to 3.76 trillion won, while operating profit surged 166% to 691 billion won, beating consensus estimates.” He added, “Despite the sharp drop in exchange rates, the company posted remarkable results thanks to the strong impact of an improved product mix.”
With supply and demand for key AI server products such as MLCCs and FCBGAs remaining tight, average selling prices (ASPs) have continued to rise. Their share of revenue has also grown significantly, leading to a sharp improvement in profitability, analysts said.
The AI-driven supercycle is expected to continue beyond the fourth quarter and into next year. KB Securities forecast fourth-quarter revenue of 4 trillion won and operating profit of 902.4 billion won for Samsung Electro-Mechanics. It estimated full-year 2027 revenue at 19.3 trillion won and operating profit at 4.9 trillion won.
Lee said, “Key AI-related components such as MLCCs and FCBGAs are enjoying an unprecedented boom. Given the extremely tight supply and demand, we expect further improvement in industry conditions and continued upward revisions to consensus estimates.” He added, “In particular, MLCCs will reliably deliver strong results, supported by LTAs signed this year.”
He forecast that LTAs would account for 70% of annual revenue and that Samsung Electro-Mechanics would rank first in market share in the AI server MLCC market.
Lee added, “The adoption of 800V DC systems and rising demand for optical modules are expected to significantly increase demand for high-value-added MLCCs and silicon capacitors.” He also said, “Unlike existing contracts, the share of LTAs guaranteeing contract terms of at least two years is expected to continue to grow.”
[email protected] Park Ji-yeon Reporter