[Click eStock] "Samsung Electro-Mechanics, Faster-than-Expected Structural Improvement... Top Pick in the Industry"

On the 30th, KB Securities maintained its investment opinion of "Buy" and a target price of 190,000 KRW for Samsung Electro-Mechanics.

Samsung Electro-Mechanics' second-quarter earnings are expected to meet market forecasts with sales of 2.08 trillion KRW and operating profit of 190.4 billion KRW. First, in the component segment (MLCC), the operating rate has been recovering since the bottom in the fourth quarter of last year. The MLCC operating rate, which was in the high 60% range in the first quarter, is expected to recover to the high 70% range in the second quarter. This is because the IT device market, including smartphones, is slowly recovering, and the demand for automotive MLCCs remains steady due to growth in the electric vehicle and ADAS markets. In the package solution segment, sales are expected to show a better-than-expected trend as IT set demand gradually recovers.

Since the beginning of this year, with the full bloom of generative AI (such as ChatGPT), the demand for server-oriented substrates, which began supply last year, is rapidly increasing. The server-oriented substrate market is highly entry-barriered and oligopolized by a few companies in Japan and Taiwan, making it highly profitable. Therefore, the product mix effect from Samsung Electro-Mechanics' expanding market share in this segment is expected. The company is also standing out in the automotive parts market, which is forecasted to grow steadily over the long term. In particular, Samsung Electro-Mechanics is rapidly expanding its market share in the MLCC market, where Japanese companies have been dominant, and is expected to establish this as a key growth driver in the future.

Lee Chang-min, a researcher at KB Securities, analyzed, "The effect of restructuring from the existing smartphone-centered business model to a high-growth market-centered model is appearing faster than expected," and stated, "We present Samsung Electro-Mechanics as the top pick in the IT components sector."

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