[Click eStock] "Samsung Electro-Mechanics Expected to Meet Market Expectations for 2Q Earnings"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities maintained its 'Buy' rating and target price of 270,000 KRW for Samsung Electro-Mechanics on the 10th, expecting the company's Q2 earnings this year to meet market expectations.

Kiwoom Securities forecasted that Samsung Electro-Mechanics' Q2 operating profit would reach 313.2 billion KRW, a 226% increase compared to the same period last year, meeting the market consensus of 290.7 billion KRW.

The package substrate segment is expected to deliver better-than-expected results. Ji-san Kim, a researcher at Kiwoom Securities, said, "Despite supply shortages in flip-chip ball grid array (FC-BGA), the company will achieve better-than-expected performance," adding, "This is reflected in price increases for FC-BGA and flip-chip chip-scale package (FC-CSP)." Samsung Electro-Mechanics is actively responding through supplementary investments focused on high value-added product lines and efforts to improve productivity. The supply of production facilities is tight, so industry expansion is expected to be limited for the time being, and the boom is expected to continue. The medium- to long-term demand outlook for data centers, 5G communications, autonomous driving, and automotive electronics is also bright.

The camera module segment is expected to underperform in Q2 due to a gap in flagship models and the resurgence of COVID-19 in India and Vietnam, but it is anticipated to recover in the second half of the year with the effect of new models. Researcher Kim analyzed, "We are strengthening responses to strategic customers' entry-level models and Chinese customers, so shipment volume is expected to increase significantly," emphasizing the competitiveness of differentiated product lines such as 100-megapixel class, optical 10x zoom, and folded zoom.

Concerns about the multilayer ceramic capacitor (MLCC) market during the recent stock price adjustment process are considered excessive. Researcher Kim said, "Although the weak demand for Chinese smartphones and the slowdown in demand for untact (non-face-to-face) devices in the second half are inevitable, industry inventory remains healthy, and issues related to IT set and automobile production disruptions will ease in the second half, combined with the effect of new smartphone model launches," adding, "The trickle-down effect from the recovery in automotive demand will also be reflected in the supply and demand conditions for IT applications."

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