[Click eStock] "Samsung Electro-Mechanics, Pessimistic Outlook Already Priced In"

[Asia Economy Reporter Kwon Jae-hee] Shinhan Investment Corp. maintained its 'Buy' rating and target price of 160,000 KRW for Samsung Electro-Mechanics on the 27th.

Samsung Electro-Mechanics recorded an operating profit of 311 billion KRW in the third quarter. This represents a 32% decrease compared to the same period last year and is a disappointing result compared to market consensus, even considering the recently lowered expectations.

The poor performance is attributed to weak shipments of multilayer ceramic capacitors (MLCC). The decline in orders from customers, which began in the fourth quarter of last year, has intensified. MLCC shipments in the third quarter decreased by 18% compared to the previous quarter, and the average selling price (ASP) is estimated to have fallen by 1%. The operating rate also dropped significantly. It is known that production cuts are being made to manage inventory internally.

Operating profit for the fourth quarter is expected to decline by 31% year-on-year to 218.2 billion KRW. Customer inventory adjustments of MLCC are expected to continue through the end of the year. Additionally, considering the sluggish sales of front-end sets, a decrease in sales of package substrates including flip chip ball grid array (FCBGA) and cameras is also anticipated.

Park Hyung-woo, a researcher at Shinhan Investment Corp., analyzed, "Since January 2021, Samsung Electro-Mechanics' stock price has continuously declined due to demand concerns, and pessimistic forecasts have already been reflected in the stock price. However, inventory has already started to decrease, and the operating rate is expected to rise as early as the beginning of the year."

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