[Click eStock] "Samsung Electro-Mechanics, Overall Business Unit Performance Expected to Increase Next Year"

Korea Investment & Securities Issues 'Buy' Rating and 210,000 KRW Target Price... Closing Price on 29th at 177,000 KRW

[Asia Economy Reporter Kum Boryeong] There is a forecast that Samsung Electro-Mechanics' overall business unit performance will improve next year.

On the 30th, Korea Investment & Securities gave Samsung Electro-Mechanics a 'Buy' rating with a target price of 210,000 KRW. The target price was raised from the previous 175,000 KRW. The closing price on the 29th was 177,000 KRW.

According to Korea Investment & Securities, next year’s sales and operating profit of the component business division, including multilayer ceramic capacitors (MLCC), at Samsung Electro-Mechanics are expected to increase by 12.8% and 39.6% respectively compared to the previous year. Researcher Cho Cheolhee of Korea Investment & Securities said, "Although market volatility is severe, profits will steadily increase at least until the first half of next year. Global smartphone shipments are expected to increase by 6.9% next year, and due to the base effect from the sluggish first half of this year caused by COVID-19, the component business division’s sales in the first half of next year will increase smoothly compared to the previous year." He added, "According to recent data from Yageo, due to difficulties in manpower supply until the Lunar New Year next year, the operating rates of Chinese companies are also limited in their increase, so the MLCC industry is in a positive situation in terms of both volume and price defense."

Sales of substrates and camera modules are also expected to increase. In particular, flip chip-chip scale package (FC-CSP), which has a high operating profit margin, is expected to see a significant increase in supply next year due to increased orders from customers following a fire at a Taiwanese competitor. Camera module sales are estimated to increase due to the expansion of product lineups for mid- to low-end smartphones.

Researcher Cho said, "The combined operating profit of both business divisions next year is expected to increase by 37.8% compared to the previous year, greatly contributing to the improvement of the company’s overall performance." He added, "In particular, the substrate division, which recorded operating losses until last year, is expected to see the most dramatic profit increase due to successful structural improvements."

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