[Click eStock] Samsung Electro-Mechanics' Negative Factors Already Reflected... A Buying Opportunity at Low Prices

[Asia Economy Reporter Lee Myunghwan] NH Investment & Securities stated on the 30th that most of the negative factors regarding Samsung Electro-Mechanics have already been reflected, making the current stock price attractive, and maintained a buy rating with a target price of 250,000 KRW.

NH Securities analyzed that the valuation has significantly declined due to various negative factors facing Samsung Electro-Mechanics. While shipments from Chinese smartphone manufacturers continue to slow, demand in the Indian and Southeast Asian markets has been sluggish due to the impact of COVID-19. In the Chinese and European markets, Apple's iPhone market share is expanding, whereas Samsung Electronics, a strategic client, is experiencing weaker-than-expected flagship smartphone sales due to the Game Optimization Service (GOS) performance limitation issue.

NH Securities estimates the company's operating profit for 2022 to be 1.5677 trillion KRW, a 5.4% increase compared to the same period last year. This is approximately 7.2% lower than market expectations. NH Securities explained that they slightly downgraded earnings forecasts for the module and component divisions to reflect the negative factors.

However, despite the weaker-than-expected business conditions and various negative factors, NH Securities evaluates that the current stock price is excessively undervalued. The valuation is trading at about a 40% discount compared to major global competitors, and the valuation band is at its lowest point.

Researcher Lee Gyuha of NH Securities said, "In the second half of the year, when smartphone demand improves, the favorable trend in the substrate business continues, and the competitiveness of waveguide module technology, a core technology for augmented reality (AR), is expected to be highlighted, leading to a full-scale rise in stock prices," adding, "The current stock price, with most negative factors already reflected, is judged to be very attractive from a mid- to long-term perspective."

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