[Click eStock] "2Q 'Surprise Earnings' Samsung Electro-Mechanics, Both MLCC and Camera Modules Strong"

2Q Operating Profit 340 Billion Won... Exceeds Market Forecast by 11%
MLCC, Semiconductor Substrates, Camera Modules All Show Solid Performance
Rising Expectations for Growth in Auto Parts Sales

[Asia Economy Reporter Minwoo Lee] Samsung Electro-Mechanics posted results in the second quarter that significantly exceeded market expectations. It is also evaluated to have secured additional growth momentum through expanded sales of automotive components entering the peak season in the third quarter.

On the 29th, Daishin Securities maintained its 'Buy' rating and target price of 250,000 KRW for Samsung Electro-Mechanics, citing these factors. The closing price the previous day was 188,000 KRW.

Samsung Electro-Mechanics recorded consolidated sales of 2.4755 trillion KRW and operating profit of 339.3 billion KRW in the second quarter of this year. These figures represent increases of 36.6% and 253.5%, respectively, compared to the same period last year. The operating profit exceeded market consensus by 10.9%, marking a strong performance. This is attributed to the high utilization rate and profitability of multilayer ceramic capacitors (MLCC), the effect of product mix strategies in semiconductor substrates, and the impact of rising average selling prices, which led to improved margins. Despite a lack of premium smartphone product launches in camera modules, the company achieved better-than-expected results due to new supplies to budget models such as the Galaxy A series and increased sales in China.

Daishin Securities expects Samsung Electro-Mechanics to enter the peak season in the third quarter and expand automotive sales, forecasting that the full-year operating profit will reach a record high of 1.448 trillion KRW, a 74.7% increase from last year. Kangho Park, a researcher at Daishin Securities, said, "Due to improvements in the product mix of MLCCs, demand for mobility devices such as laptops, tablet PCs, 5G smartphones, and wearable devices will increase," adding, "The larger size of TVs will also increase MLCC requirements per device, and the expansion of high-capacity MLCCs will sustain high profitability." He predicted that the product mix will improve focusing on ultra-small and high-capacity products rather than price increases.

Sales of semiconductor printed circuit boards (PCBs) are also expected to increase in the second half, showing a favorable trend in profitability. The supply of high-priced products such as flip chip ball grid arrays (FC BGA) and flip chip chip scale packages (FC CSP) remains limited, sustaining price increases. Researcher Park explained, "With the peak PC season and increased server demand (FC BGA), and accelerated replacement of 5G smartphones (FC CSP), supply capacity will be limited compared to demand growth."

Next year, corporate value is expected to rise as automotive component sales become full-scale. This is because camera module supplies to Tesla's new cars have recently increased, and the MLCC plant in Tianjin, China, is expected to start operations next year. Researcher Park assessed, "Sales of automotive and industrial components will increase," and added, "Camera modules and MLCCs are advantageous for expanding sales and securing new clients in the Chinese domestic market."

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