[Click eStock] "Samsung Electro-Mechanics, Full-Scale Strengthening of Automotive Momentum... Target Price Up"

Target Price Raised from 165,000 KRW to 180,000 KRW

Meritz Securities on the 25th raised the target price for Samsung Electro-Mechanics from 165,000 KRW to 180,000 KRW, viewing that the momentum in automotive electronics is entering a full-fledged strengthening phase due to the spread of autonomous driving in China. The investment rating was maintained as 'Buy.'

Researcher Yang Seung-su of Meritz Securities stated, "In the smartphone market environment where demand expansion is limited, securing competitiveness through structural improvement has been a major task within the sector for a long time, and Samsung Electro-Mechanics has demonstrated relatively superior results in this regard, making its relative investment attractiveness high within the industry. We have raised the fair price by reflecting the upward revision of estimates for 2025-2026 and the increased weighting of 2026 in the valuation calculation," he explained.

Meritz Securities forecast that Samsung Electro-Mechanics will record sales of 2.7423 trillion KRW in the first quarter of this year, up 4.5% year-on-year, and operating profit of 197.8 billion KRW, up 9.7%, meeting the consensus (average securities firm forecast) on operating profit. Researcher Yang said, "Contrary to expectations regarding the effect of China's 'old-for-new' subsidy policy, IT set demand in the first quarter was understood to be only at a seasonal recovery level. Nevertheless, we raised our previous estimates by 3.4% and 3.7%, respectively, because solid demand in automotive electronics and industrial sectors, centered on Chinese electric vehicles and artificial intelligence (AI) servers, increased the downside rigidity of first-quarter performance and acted as an upward factor exceeding expectations."

The expansion of autonomous driving functions in the Chinese electric vehicle market is analyzed as positive for Samsung Electro-Mechanics. The Chinese electric vehicle market has entered a technological inflection point beyond simple sales growth, expanding autonomous driving functions. For example, BYD, the number one electric vehicle company in China, announced that it will equip all models with the advanced autonomous driving function called 'God's Eye.' Researcher Yang said, "The spread of autonomous driving technology, which involves multiple sensors, means a significant increase in the demand for multilayer ceramic capacitors (MLCC), which is very positive for Samsung Electro-Mechanics. In particular, unlike the smartphone industry, the Chinese electric vehicle market has limited technological capability and reliability among local MLCC companies, so it is worth noting that, similar to the AI server market, benefits are concentrated on global leading MLCC companies."

Meritz Securities projected that Samsung Electro-Mechanics' automotive MLCC sales this year will increase by 19.9% year-on-year to 1.1833 trillion KRW. Researcher Yang said, "It will act as a core pillar firmly supporting Samsung Electro-Mechanics' performance downside along with the AI server market."

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