[Click eStock] "Samsung Electro-Mechanics, Faster-than-Expected Rebound... Target Price Maintained at 180,000 Won"
On the 27th, IBK Investment & Securities maintained a buy rating and a target price of 180,000 KRW for Samsung Electro-Mechanics, citing a faster-than-expected rebound.
Samsung Electro-Mechanics' sales for the first quarter of 2024 are expected to reach 2.5543 trillion KRW, a 10.8% increase compared to the fourth quarter of 2023. The company raised its outlook for components and optical communications. Package sales are projected to decrease by 10.9% quarter-on-quarter, components to increase by 14.4%, and optical communications to rise by 17.5%. Operating profit for the first quarter of 2024 is expected to be 178.5 billion KRW, up 61.8% from the fourth quarter of 2023. The package segment is expected to underperform compared to the previous quarter, while components are anticipated to increase by more than 70%, and optical communications to more than double.
Samsung Electro-Mechanics' first-quarter 2024 sales are expected to exceed previous forecasts. This is attributed more to seasonal effects and customers' low inventory levels rather than a full-scale demand improvement. This trend is expected to continue into the second quarter. The package segment is expected to see an increased proportion of servers and growth in ARM-related volumes due to new product effects. Components are anticipated to improve in industrial sector share. Optical communications are also expected to see a higher proportion of applications beyond smartphones.
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Starting from the fourth quarter of 2023 as the bottom, quarterly performance in 2024 is expected to trend upward. Kim Un-ho, a researcher at IBK Investment & Securities, stated, "Potential benefits from on-device applications are anticipated, the non-IT share of MLCC is steadily increasing, and growth is underway through securing new clients, thereby establishing a stable growth engine from a long-term perspective." The package division is expected to offset IT sector weakness, led by servers, networks, and automotive sectors.
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