[Click eStock] "Samsung Electro-Mechanics' Performance Expected to Increase Flexibly in the Second Half"

DB Financial Investment Report

[Asia Economy Reporter Minji Lee] DB Financial Investment maintained a buy rating and a target price of 270,000 KRW for Samsung Electro-Mechanics on the 28th.

In the first quarter, Samsung Electro-Mechanics recorded sales of 2.6168 trillion KRW and an operating profit of 410.5 billion KRW, representing increases of 14.2% and 15.1% respectively compared to the same period last year, meeting market expectations.

Seongryul Kwon, a researcher at DB Financial Investment, said, “Despite the sluggish smartphone market, which is Samsung Electro-Mechanics' main front-end industry, sales in the front-end business division increased, successfully passing the first hurdle,” adding, “Although the overall market volume is weak, the proportion of high value-added products has increased, and the number of components required per set has risen.”

In the case of MLCCs, the industrial and automotive sectors are covering for the weak IT and commodity markets, and even within the sluggish smartphone market, 5G smartphones, a major demand source for MLCCs, continue to grow in double digits. The increase in FC-BGA sales, which continue to face package supply shortages, and the rise in high-spec BGA sales have significantly improved the division’s margins.

The camera module, which has a high raw material ratio relative to sales and a strong dependence on Chinese smartphones, is the main factor behind the company-wide performance decline in the second quarter. However, the core businesses, package and MLCC, are expected to perform well in the second quarter. In the second half of the year, performance is predicted to increase flexibly due to partial resolution of IC supply shortages, new smartphone model launches, and steady demand for high value-added package substrates.

Researcher Seongryul Kwon analyzed, “Now that the stock price is at a bottom phase, the focus should rather be on how much the performance rebound will be if the set market improves even slightly,” adding, “Although performance is slightly downgraded due to delayed recovery in set demand, the core foundation remains solid.”

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