[Click eStock] "Samsung Electro-Mechanics Expands Automotive MLCC Share... 3Q Earnings Meet Consensus"
Sangsangin Securities maintained a buy rating and a target price of 182,000 KRW for Samsung Electro-Mechanics on the 11th, stating that the Component Business Division's performance continues to improve due to the increased proportion of automotive laminated ceramic capacitors (MLCC).
Jung Min-gyu, a researcher at Sangsangin Securities, said, "Global smartphone demand is expected to decrease by about 6% compared to the previous year, but the trend of expanding the proportion of flagship models is being maintained," adding, "Therefore, Samsung Electro-Mechanics, which has a high-value product lineup, is expected to minimize the impact of demand decline."
Researcher Jung pointed out as investment highlights for Samsung Electro-Mechanics the cost improvement possible through higher MLCC raw material internalization compared to competitors, and the completion of the Vietnam substrate factory in the fourth quarter of this year, which will expand sales of AI and server-oriented FC-BGA (Flip Chip Ball Grid Array) package substrates.
Samsung Electro-Mechanics' third-quarter sales are expected to be 2.2801 trillion KRW, down 4.4% year-on-year, and operating profit is forecasted at 242.9 billion KRW, down 21.9%, in line with consensus estimates. The Component Business Division's operating profit is estimated to increase by about 22.3% quarter-on-quarter to 156.6 billion KRW. The average operating rate for the third quarter entered the 70% range, and it is expected to rise to the 80% range by the end of this year.
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Researcher Jung explained, "Samsung Electro-Mechanics is investing in a higher level of raw material internalization compared to competitors and has internalized some powders with high process difficulty," adding, "Investments to expand automotive MLCC production at plants in China and the Philippines have begun, and cost improvement effects from raw material internalization are expected." He also added, "The Package Solution Business Division is expected to accelerate AI and server FC-BGA production starting with the operation of the Vietnam factory in the fourth quarter of 2023."
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