[Click eStock] Samsung Electro-Mechanics, Global Competitiveness Expansion Expected Across All Businesses 'Undervalued'

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 25th that it maintains a buy rating and a target price of 250,000 KRW for Samsung Electro-Mechanics. Although the global competitiveness of all businesses including substrates, MLCC, and camera modules is expected to expand in 2023, the stock price is still considered undervalued.

Park Kang-ho, a researcher at Daishin Securities, stated, "In 2023, investment in the server sector is expected to increase due to the growing use of AI (artificial intelligence) and big data. Additionally, the automotive industry is transitioning to electrification, autonomous driving, and eco-friendly vehicles (led by electric vehicles), accelerating growth." He added, "This signifies a paradigm shift in IT devices and automobiles utilizing AI, big data, and electric vehicles (autonomous driving) from the traditional IT front industries centered on smartphones, TVs, and PCs."

Samsung Electro-Mechanics' portfolio entered a new growth phase in 2023 as the growth drivers shifted in line with changes in the front industries. At the time when demand for smartphones, PCs, and TVs weakened in the second half of 2022, a significant shift in portfolio weighting began, and among global electronic component companies, only Samsung Electro-Mechanics holds an optimized portfolio. Each business area is expected to narrow the gap with the first place in global market share from the second place. Long-term expansion of portfolio weighting is necessary in anticipation of new growth opportunities in 2023.

Researcher Park noted, "Samsung Electro-Mechanics, which has reduced low-profit and low-competitiveness businesses over the past 20 years, expects a new leap in 2023 with its current portfolio consisting of substrates, MLCC, and cameras." The operating profit estimate for 2023 (1.57 trillion KRW) is expected to improve operating profit margins through mix improvement (expansion of high value-added products) and market share growth driven by AI, big data, and autonomous driving markets, based on a solid foundation rather than further decline. He emphasized, "The current price-to-earnings ratio (PER) of 9.5 times is undervalued when reflecting the portfolio value of Samsung Electro-Mechanics, which has secured competitiveness in future industries. A revaluation of valuation is needed, and from a long-term perspective, an increase in portfolio weighting is recommended."

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