[Click e Stocks] "Samsung Electro-Mechanics Secures Mid- to Long-Term Growth Potential... Buying Opportunity"

NH Investment & Securities maintained its buy rating and a target price of 190,000 KRW for Samsung Electro-Mechanics on the 4th, citing the company's potential to directly benefit from autonomous driving and artificial intelligence (AI), securing mid- to long-term growth prospects. Additionally, it recommended buying due to expected diversification of customers and growth in high value-added substrates and automotive multilayer ceramic capacitors (MLCCs).

Samsung Electro-Mechanics' stock price declined due to the possibility of its third-quarter earnings falling short of expectations and concerns over slowing growth in automotive MLCC shipments. However, mid- to long-term growth is expected from increased volume through lineup expansion in automotive MLCCs and growth in high value-added substrates benefiting from AI.

Lee Gyu-ha, a researcher at NH Investment & Securities, explained, "Previously, automotive MLCCs had a relatively high proportion of mid- to low-priced applications such as infotainment, but recently, the share of high value-added applications related to autonomous driving, such as ADAS and powertrain, has expanded to about 55%. We expect coverage to widen to high-end areas like high-temperature, high-pressure powertrain MLCCs next year, projecting significant mid- to long-term benefits from autonomous driving."

He added, "Furthermore, with the expected increase in domestic customers' AI-related HBM market share and benefits from packaging turnkey projects, Samsung Electro-Mechanics is smoothly conducting performance tests of FC-BGA (Flip-Chip Ball Grid Array) substrates with AI chip and cloud companies, raising expectations for expanded substrate segment performance through customer diversification in 2024."

The researcher also noted, "The existing core business of IT MLCCs is already maintaining low inventory levels, so there is a possibility of volume expansion again after the fourth quarter. Since we believe the industry has already passed the bottom, if demand recovery becomes visible, the scope of earnings improvement could be significant, which is also positive."

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