[Click eStock] "Samsung Electro-Mechanics Raises Earnings Forecasts for Both Components and Substrates"

Tight Supply Boosts Operating Profit Forecasts for Second Half and Full Year Next Year
Hana Financial Investment "Maintains Samsung Electro-Mechanics Target Price at 290,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Samsung Electro-Mechanics is expected to show strong performance thanks to tight supply and demand in the Component Solutions and Substrate Solutions divisions. As Samsung Electro-Mechanics' flagship product, smartphones, enter a phase with high growth visibility starting next year, it is also anticipated to benefit accordingly.

On the 10th, Hana Financial Investment maintained its investment opinion of 'Buy' on Samsung Electro-Mechanics with a target price of 290,000 KRW. The previous day's closing price was 181,000 KRW.

Hana Financial Investment revised upward its operating profit forecasts for Samsung Electro-Mechanics' core business, Component Solutions, by 6% for the second half of this year and 7% for the full year of next year compared to previous estimates. The market for multilayer ceramic capacitors (MLCC) is expected to maintain tight supply and demand. Although MLCC suppliers have secured capacity expansion space, they are aligning equipment deployment with demand. Product mix improvements are also ongoing. Samsung Electro-Mechanics is increasing the proportion of high value-added products within its main IT sector and is also expanding sales proportions in automotive and industrial equipment sectors.

Performance forecasts for the Substrate Solutions division were also revised upward. Hana Financial Investment raised its operating profit estimates for the second half of this year and the full year of next year by 9% and 3%, respectively. Package substrates are also in short supply, and this situation is expected to continue through next year. Kim Rok-ho, a researcher at Hana Financial Investment, explained, “Domestic as well as Japanese and Taiwanese companies are expanding production capacity, but due to the high performance and high integration of semiconductors, package substrates are becoming larger and more multilayered, which is consuming production capacity.”

From next year, smartphones are expected to have higher growth visibility. While demand for PCs, laptops, and tablets, which benefited from non-face-to-face trends, is a concern, smartphones have not yet benefited from such trends. Due to semiconductor supply shortages this year, shipment volumes were revised downward from initial expectations. Therefore, the smartphone segment is likely to grow compared to this year.

Researcher Kim said, “Although Samsung Electro-Mechanics' downstream industries are diversifying, the smartphone share still exceeds 40% based on MLCC. Since smartphones are entering a phase with high growth visibility, I recommend Samsung Electro-Mechanics as a representative mobile stock.”

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