[Click eStock] "Samsung Electro-Mechanics Passing Earnings Bottom... Target Price Down"

Kiwoom Securities diagnosed on the 17th that Samsung Electro-Mechanics is passing through its earnings bottom. The investment opinion 'Buy' was maintained, but the target price was lowered from 210,000 KRW to 180,000 KRW.

Kiwoom Securities forecasted that Samsung Electro-Mechanics will record a 4th quarter revenue of 2.3622 trillion KRW, a 2% increase compared to the same period last year, and an operating profit of 143.8 billion KRW, a 30% increase during the same period. Kim Sowon, a researcher at Kiwoom Securities, explained, "Due to sluggish smartphone demand, year-end inventory adjustments centered on multilayer ceramic capacitors (MLCC) and ball grid array (BGA) substrates are inevitable."

Researcher Kim anticipated that momentum will strengthen across all business divisions next year. He stated, "Next year, momentum is expected to improve with the expansion of artificial intelligence (AI) device penetration, new supply of flip-chip ball grid array (FCBGA) for AI accelerators, and improved smartphone demand due to strengthened Chinese stimulus measures. In particular, not only MLCCs for AI servers but also the increase in MLCC mounting volume will accompany the acceleration of AI device penetration," he observed.

He continued, "Despite the recent sharp rise in stock price, the price-to-book ratio (PBR) for 2025 is 1.1 times, significantly below the past five-year average of 1.5 times and the 2022?2023 average of 1.4 times when earnings were declining. The 4th quarter earnings are passing the bottom, and with the strengthening benefits from AI, valuation normalization is necessary," he analyzed.

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