Samsung Electro-Mechanics Excited Again by Reviving MLCC Market Conditions

[Asia Economy Reporter Eunmo Koo] Samsung Electro-Mechanics is expecting improved performance in the third quarter, driven by the recovery in demand for multilayer ceramic capacitors (MLCC). As expectations for better results rise, the stock price has reflected this excitement, showing an upward trend every day this month without exception.

According to the Korea Exchange on the 8th, Samsung Electro-Mechanics' stock price closed at 138,000 KRW, up 2.22% (3,000 KRW) from the previous trading day. The stock price has risen for five consecutive trading days this month, increasing by 10.8%, significantly outperforming the KOSPI return of 2.5% during the same period. As of 9:30 AM on the same day, it continued its recent upward trend, trading at 144,500 KRW, up 4.71% (6,500 KRW) from the previous day.

The rise in Samsung Electro-Mechanics' stock was led by institutional investors. Since the beginning of this month until the previous day, institutional investors purchased 85.3 billion KRW worth of Samsung Electro-Mechanics shares, which is the second-largest amount for an individual stock during this period, following SK Hynix (99.3 billion KRW).

The faster-than-expected improvement in the MLCC market is believed to be driving the positive sentiment. Juminwoo, a researcher at Meritz Securities, explained, “Samsung Electronics' smartphone shipments reached 72.5 million units, a 35% increase compared to the previous quarter. Additionally, shipments of communication equipment and servers were stronger than expected, and demand for desktops and tablets continued solid growth following the second quarter.”

Along with the improving MLCC market, competitor Taiwan's Yageo also showed increased sales. Yageo's sales in July grew 107% compared to the same period last year and increased 54% compared to June. Jisan Kim, a researcher at Kiwoom Securities, stated, “Looking at Yageo's monthly sales trends, third-quarter sales are increasing significantly, resembling the boom cycle of 2018.”

Besides the strong demand for MLCC, the substrate business division is also expected to show improved performance, which is another positive factor. Researcher Joo said, “Module solutions are expected to see a significant recovery in performance with shipments of the flagship Galaxy Note20 series estimated at 5.2 million units in the third quarter and 3.1 million units in the fourth quarter, compared to the previous quarter. Substrate solutions are expected to improve significantly quarter-over-quarter due to the continued solid package market and the start of circuit board (RFPCB) shipments to North American customers.”

Due to improved sales to customers, expanded shipments of 5G smartphones, and the favorable substrate market, Samsung Electro-Mechanics is expected to achieve solid results in the third quarter. According to financial information provider FnGuide, Samsung Electro-Mechanics' operating profit for the third quarter of this year is estimated at 217.4 billion KRW, a 20.6% increase compared to the same period last year. However, sales are expected to reach 2.1908 trillion KRW, up 20.9% from the previous quarter (1.8122 trillion KRW) but down 3.6% compared to the same period last year.

This content was produced with the assistance of AI translation services.