Shinhan Investment Corp. Lowers Samsung Electro-Mechanics Target Price to 195,000 Won

[Asia Economy Reporter Park So-yeon] Shinhan Financial Investment has lowered the target price for Samsung Electro-Mechanics to 195,000 KRW while maintaining a buy rating.

According to FN Guide on the 23rd, Shinhan Financial Investment stated in a recent report on Samsung Electro-Mechanics that "Operating profit for the second quarter of this year is expected to be 358.7 billion KRW, in line with consensus."

Shinhan Financial Investment mentioned, "MLCC (Multilayer Ceramic Capacitors) likely underperformed compared to initial expectations due to weak IT demand," but added, "However, packaging substrates are expected to deliver strong performance amid tight supply conditions."

They continued, "The core business, MLCC, will be significantly affected by the decline in front-end set sales," and said, "Increasing the proportion of high-priced MLCCs for automotive applications may offset the shipment decline and ASP (average selling price) drop in IT, which will likely determine the performance direction in the second half of the year." They also noted the possibility of downward revisions to MLCC estimates.

Shinhan Financial Investment stated, "Packaging substrates remain solid," and "Profitability is expected to continue improving in the second half of the year." Furthermore, they said, "Unlike second-tier substrate companies, there are no concerns about profitability immediately after FCBGA (Flip Chip Ball Grid Array) expansion," and added, "The high-spec FCBGA that Samsung Electro-Mechanics plans to increase production of from the second half of the year is a product with a significant technological gap compared to existing FCBGA."

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