[Click eStock] "Samsung Electro-Mechanics, Both MLCC and Package Sales Are Strong... Target Price Up 26%"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained its investment opinion on Samsung Electro-Mechanics on the 7th and raised the target price by 26% from the previous level to 240,000 KRW. This is based on the judgment that the strength of global multilayer ceramic capacitor (MLCC) and package substrate manufacturers is solidifying.

In the fourth quarter, Samsung Electro-Mechanics is estimated to record sales of 2.136 trillion KRW and operating profit of 257 billion KRW, growing 16% and 85% respectively compared to the same period last year. Kim Rok-ho, a researcher at Hana Financial Investment, said, “Although the won-dollar exchange rate decline slightly lowered the previous estimates, components and substrate solutions centered on MLCC and package substrates are expected to maintain solid performance following the previous quarter,” adding, “Due to year-end inventory adjustments, module solution sales are expected to decrease by 23% compared to the previous quarter because of reduced customer orders.”

This year, Samsung Electro-Mechanics’ sales are expected to reach 9.6385 trillion KRW and operating profit 1.1449 trillion KRW, increasing 14% and 40% respectively from last year. Assuming a won-dollar exchange rate of 1,080 KRW, the forecast has been slightly revised downward compared to previous projections, but the MLCC sector is expected to experience market conditions surpassing those of 2018. Researcher Kim Rok-ho explained, “In July last year, Korea’s ceramic capacitor export volume already exceeded the 2018 level,” and added, “Next year, demand recovery for smartphones and automobiles, along with 5G, automotive electronics, and the increasing share of electric vehicles, will continue to set monthly records.”

The package substrate segment is also expected to continue its strong performance. This is because high-performance semiconductor chips are being installed in smartphones and PCs, leading to larger and more multilayered package substrates. Demand for RF-related SiP substrates required for 5G smartphones is also rapidly increasing. The module solution segment is anticipated to enter a new phase in 2022 with the potential supply of folded zoom modules to North American customers.

Researcher Kim Rok-ho stated, “The component solution segment is expected to reach its highest PBR (price-to-book ratio) in 2021 due to fundamental improvements and favorable market conditions,” and added, “The module solution segment’s profit contribution will also increase, forming a new upper band for the PBR in 2021.”

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