[Click eStock] "Samsung Electro-Mechanics, Record High Performance Expected Next Year"

[Asia Economy Reporter Lee Junhyung] Daishin Securities has analyzed that Samsung Electro-Mechanics will achieve record-high performance next year as the profitability of all its businesses, including multilayer ceramic capacitors (MLCC), camera modules, and semiconductor substrates, improves. Due to the expansion of the 5G market, MLCC is expected to maintain high profitability, and the mix effect expansion of semiconductor substrate products along with new investments will secure both growth and profitability, making Samsung Electro-Mechanics the top preferred stock in the first half of next year.

On the 18th, Daishin Securities maintained a 'Buy' rating on Samsung Electro-Mechanics and raised the target price by 19% to 220,000 KRW. The closing price the previous day was 171,000 KRW. Next year’s sales are expected to reach 9.5683 trillion KRW, with operating profit estimated at 1.1305 trillion KRW. The estimated operating profit margin for next year is projected to improve by 2.1 percentage points from this year to 11.8%.

Firstly, the MLCC sector is analyzed to maintain high profitability as an environment similar to the peak boom in 2018 is approaching. The global smartphone market next year is expected to expand around 5G in the 28 gigahertz (GHz) band, increasing MLCC usage, and the additional demand for MLCC due to autonomous driving in automobiles is expected to maximize economies of scale.

Camera module profitability is also expected to rise. Kangho Park, a researcher at Daishin Securities, explained, "Considering that the differentiation strategy of the smartphone market next year lies in foldable phones and high-zoom camera functions, the application of folded cameras will expand," adding, "Expansion of Samsung Electronics’ applied models and additional acquisition of global clients for (camera modules) are expected." The proportion of folded camera models among Samsung Electronics’ Galaxy S21 models is increasing next year, and global smartphone companies such as Apple are also presumed to be preparing to enter the folded market.

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