Samsung Electro-Mechanics, Short-Term Completion of Inventory Fixation... Favorable Business Environment

[Asia Economy Reporter Park So-yeon] Hana Financial Investment maintained a target price of 290,000 KRW and a buy rating for Samsung Electro-Mechanics, stating that "inventory adjustments are expected to be completed in the short term and the business environment is favorable."

According to FN Guide on the 16th, Hana Financial Investment forecasted in a recent report that Samsung Electro-Mechanics' Q4 sales last year would be 2.3616 trillion KRW, with an operating profit of 316.5 billion KRW.

While sales are expected to meet consensus levels, operating profit is anticipated to fall short by 13%.

Researcher Kim Rok-ho of Hana Financial Investment explained, "It is estimated that one-time costs occurred related to achieving record-high performance last year."

Component Solutions were understood to have both price and volume lower than expected due to year-end inventory adjustments of MLCC.

Module Solutions' sales were estimated to exceed previous forecasts as Samsung Electronics' smartphone shipments in Q4 last year were favorable and preparations for the next flagship model were underway.

Researcher Kim said, "Despite Samsung Electro-Mechanics achieving record-high performance in 2021, the stock price did not correspond accordingly. This is believed to be due to concerns that a long-term inventory adjustment of MLCC, similar to 2019, would recur and the sluggish shipment volume of Samsung Electronics smartphones."

He added, "It is expected that the MLCC inventory adjustment will be completed shortly, and the stock price will rise during the period when Samsung Electronics smartphone shipments recover."

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