[Click eStock] "Samsung Electro-Mechanics, Record High Q4 Performance Expected... A Buying Opportunity at Low Prices"

[Asia Economy Reporter Ji Yeon-jin] NH Investment & Securities announced on the 8th that Samsung Electro-Mechanics is expected to achieve its highest-ever performance in the fourth quarter, and considering the mid- to long-term industry outlook, the recent stock price decline is excessive.

Lee Gyu-hwa, a researcher at NH Investment & Securities, said, "Despite the traditional off-season in the fourth quarter, the MLCC (electrical energy device) industry remains robust, and with the continued strong performance of the substrate division, the results are expected to significantly exceed estimates, achieving the highest-ever performance for the fourth quarter. We expect the front-end industry outlook to be more positive in 2022 due to demand recovery and easing supply shortages, and recommend taking the recent stock price decline as a buying opportunity."

Samsung Electro-Mechanics, an electronics affiliate of the Samsung Group, manufactures electronic components such as MLCCs. Last year's sales increased by 2.1% year-on-year to 8.209 trillion KRW, composed of approximately 36% from the module division, about 46% from the component division, and 18% from the substrate division. This year, as the MLCC supply-demand imbalance intensifies, margin expansion is expected.

Operating profit for the third quarter is expected to exceed market forecasts, increasing by 45.4% year-on-year to 439.9 billion KRW. The fourth quarter is also expected to increase by 45.7% to 387.8 billion KRW.

The researcher said, "Considering that the second half of this year's performance surpasses that of the second half of 2018, when MLCC prices sharply rose despite no price increases in the second half of this year, we believe Samsung Electro-Mechanics' profit level and performance visibility have reached a new level. The MLCC industry remains tight due to supply shortages despite a slowdown in front-end industry demand, and substrate prices continue to rise due to packaging supply shortages. Additionally, mid- to long-term expansion of high-margin server-oriented packaging in the substrate business is expected, which is positive."

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