[Click eStock] "Samsung Electro-Mechanics, Optical Communication Division Performance Decline Inevitable This Year"

[Asia Economy Reporter Hwang Yoon-joo] Hana Financial Investment maintained a 'Buy' rating and a target price of 290,000 KRW for Samsung Electro-Mechanics on the 31st, expecting this year's performance to slightly decrease compared to the previous quarter.

Kim Rok-ho, a researcher at Hana Financial Investment, stated, "Samsung Electro-Mechanics' operating profit for Q2 2022 is forecasted to be 411.8 billion KRW, a 1% decrease from the previous quarter."

Researcher Kim explained, "In optical communication, the effect of flagship models from client companies is diminishing, making a performance decline compared to the previous quarter inevitable. However, components and package solutions are expected to record solid results based on profitability, and MLCC is anticipated to see an increase in volume compared to the previous quarter due to automotive demand and easing inventory adjustments by smartphone manufacturers in the Greater China region."

He continued, "Although package solutions will find it difficult to achieve significant sales growth due to high utilization rates, favorable pricing caused by supply shortages and the resulting high profitability are expected."

Researcher Kim projected Q1 2022 sales at 2.5328 trillion KRW (YoY +11%, QoQ +4%) and operating profit at 416.5 billion KRW (YoY +17%, QoQ +32%). This slightly upgrades previous estimates.

Researcher Kim stated, "Although MLCC prices will decline compared to the previous quarter, increased volume will lead to higher sales, achieving results in line with previous forecasts." He added, "Package solutions will maintain high utilization rates, so sales growth compared to the previous quarter will not be significant, but solid profitability will be realized based on favorable exchange rates and pricing."

He also predicted, "Optical communication solutions will smoothly prepare initial volumes for the Galaxy S22, and despite inventory adjustments by smartphone manufacturers in the Greater China region, solid performance is expected."

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