[Click eStock] "Samsung Electro-Mechanics to Watch in H1 This Year, Electric Vehicles & Non-Memory Expectations Up"

Low-Profit Sector Restructuring... Restructuring Revenue Model of Substrate Business
Foldable Phones and Tesla-Based Cameras Also Expected to Drive Sales Growth

Samsung Electro-Mechanics Suwon Plant Exterior View

[Asia Economy Reporter Minwoo Lee] Samsung Electro-Mechanics is expected to improve its performance this year, focusing on electric vehicles and non-memory sectors. This outlook is based on the company's strategy to streamline low-profit segments and concentrate investments in high-value-added areas, with the proportion of automotive electronics sales based on cameras gradually increasing.

On the 18th, Daishin Securities maintained its 'Buy' rating and target price of 250,000 KRW for Samsung Electro-Mechanics, citing these factors. The closing price on the previous day was 184,000 KRW. As additional facility investments are made in semiconductor substrates and camera modules, the main markets are expected to shift, leading to positive evaluations in the market.

Operating profit this year is projected to reach 1.597 trillion KRW, a 10.4% increase compared to last year's estimate. This is attributed to improvements in competitiveness and profitability across each business segment, which is expected to lead to a revaluation of the company's valuation.

Firstly, in the substrate business, the restructuring of low-profit segments and focused investment in high-value-added areas are expected to reorganize the business composition. This is anticipated to result in improved profit margins and reduced volatility, leading to a revaluation. Kangho Park, a researcher at Daishin Securities, explained, "Samsung Electro-Mechanics discontinued HDI substrates in 2019 and rigid-flexible printed circuit boards (R/F PCB) last year, and plans to invest about 1 trillion KRW in the flip-chip ball grid array (FC BGA) sector from this year through next year. The substrate business is expected to expand sales from mobile substrates (FC CSP, SiP, AiP), which have global competitiveness, to PC and server sectors (FC BGA), growing into a global semiconductor substrate company."

The camera module segment is also expected to enter a phase of substantial growth, influenced by the increased share of folded cameras and participation in the automotive electronics market. Park said, "It is estimated that Apple will apply a folded camera capable of high-magnification zoom for the first time in the top-tier model of the iPhone 15 in 2023, which can be interpreted as the popularization of folded cameras. The entry of Chinese smartphone manufacturers could expand the customer base for the camera module business, and the proportion of automotive electronics sales is expected to gradually increase, as Samsung Electro-Mechanics already supplies Tesla." He further analyzed that Samsung Electro-Mechanics, along with LG Innotek, is considered a key supplier to Tesla.

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