[Click eStock] "Samsung Electro-Mechanics Maintains High MLCC Market Share... Demand Improvement in Second Half"

[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities evaluated on the 7th that Samsung Electro-Mechanics' third-quarter performance is expected to be favorable compared to concerns. The investment opinion 'Buy' and target price of 250,000 KRW were maintained.

Park Kang-ho, a researcher at Daishin Securities, stated, "The third-quarter operating profit is estimated at 381.1 billion KRW, down 16.4% from the same period last year, and sales are estimated at 2.61 trillion KRW, up 2.6%."

Researcher Park explained, "MLCC faces pressure on improving operating rates due to sluggish front industries (smartphones, PCs), but it still maintains a high market share centered on ultra-small high-capacity products in the PC sector," adding, "Demand is judged to have improved compared to the first half due to new model (5G) launches by global smartphone companies such as Apple, Samsung Electronics, and China."

He stated that Samsung Electro-Mechanics' operating profit estimates for 2022 and 2023 exist in the range of 1.5 trillion KRW. The possibility of MLCC oversupply compared to the past is low, and the period of high profitability volatility is different from the present.

He analyzed, "First, the main market for MLCC, smartphones, has transitioned from LTE (4G) to 5G, and MLCC usage per 5G smartphone has increased by 20-30%, contributing to overall operating rate and mix improvement."

Regarding the laptop market, he estimated, "Compared to 2019, 2022 and 2023 are estimated at 210 million to 220 million units," diagnosing, "Although this is a decrease from 250 million units at the beginning of the year, market size expansion is an important growth factor." This means that personal and enterprise laptops are growing centered on high specifications, driving demand for high-capacity MLCCs.

Samsung Electro-Mechanics' competitiveness over Japanese companies in the smartphone and PC sectors is also positive.

Researcher Park said, "Stable operating rates and mix effects play an important role in achieving an annual operating profit of 1.5 trillion KRW," and predicted, "New growth will come from automotive and industrial sectors, with the automotive sales ratio expanding from 2022 as a turning point."

Researcher Park estimated that the automotive sector ratio will increase from 10% in Q4 2021 to 18% at the end of 2022 and 25% in 2023.

He added, "Revaluation is underway from a business valuation perspective," and "Earnings per share (EPS) are historically low, so stock price increases can be expected."

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