[Click eStock] "Samsung Electro-Mechanics, Below Expectations Last Year but Steady Growth This Year"

[Asia Economy Reporter Lee Jung-yoon] Hyundai Motor Securities maintained a buy rating and a target price of 230,000 KRW for Samsung Electro-Mechanics on the 9th, stating that the operating profit of the substrate division is expected to increase and drive the overall operating profit.

Samsung Electro-Mechanics recorded sales and operating profit of 2.4299 trillion KRW and 316.1 billion KRW, respectively, in the fourth quarter of last year. The operating profit fell short of estimates (consensus) due to one-time costs such as bonus payments.

Hyundai Motor Securities forecast that Samsung Electro-Mechanics' sales and operating profit this year will maintain a growth trend following last year, reaching 10.414 trillion KRW and 1.7026 trillion KRW, respectively. Park Chan-ho, a researcher at Hyundai Motor Securities, explained, "By division, the substrate division's operating profit is expected to increase by 73% year-on-year to 406.8 billion KRW, driving the overall operating profit, while the component and optical solutions divisions are expected to continue external growth and contribute to company-wide growth."

He added, "The center of profit increase this year is expected to be the package solutions division," and said, "The substrate business is expected to record sales of 2.0132 trillion KRW and operating profit of 406.8 billion KRW, reflecting benefits from supply increases due to favorable market conditions with tight supply and demand, as well as the effect of restructuring low-profit businesses."

For the component division, with the growth in shipments of IT sets such as smartphones, external growth is expected to continue this year as well, with sales and operating profit predicted at 5.1709 trillion KRW and 1.11305 trillion KRW, respectively. Furthermore, as the year progresses, the expansion of high-value-added products such as 5G and automotive electronics is expected to improve performance through an increase in blended average selling price (Blended ASP) and a seasonal pattern of stronger performance in the second half.

The optical solutions division is also expected to see slight growth in sales and operating profit due to increased flagship sales from major customers, improved main camera specifications in mid- to low-priced models, and increased shipments from Chinese companies.

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