[Edaily Reporter kyoungeun kim ] Morgan Stanley has changed its top pick from SamsungElectronics to SamsungElectroMechanics.
According to Yonhap News on the 12th, Morgan Stanley changed its top pick to SamsungElectroMechanics(009150), citing the high likelihood of rising multilayer ceramic capacitor (MLCC) prices and improving demand for Ajinomoto Build-Up Film (ABF) substrates.

The firm maintained its “Overweight” rating on SamsungElectroMechanics and raised its target price from 2.56 million won to 2.62 million won.
The firm projected that investment in artificial intelligence (AI) data centers will keep component demand strong, and that SamsungElectroMechanics’ margins and earnings per share (EPS) estimates will exceed market consensus by a wider margin.
We believe that the trend of customers placing advance orders will support MLCC prices from the second half of this year through next year.
Consequently, SamsungElectroMechanics’ AI-related revenue share is expected to expand from 20% in 2026 to 31% in 2027. The analysis suggests that as AI revenue more than doubles, revenue and profit growth will be structurally reinforced.
The growth potential of the ABF business was also highlighted. SamsungElectroMechanics has secured several orders for AI chip substrates from U.S. application-specific integrated circuit (ASIC) manufacturers, and operations at its new factory in Vietnam will expand through 2028. Morgan Stanley believes ABF revenue could increase four to fivefold by 2030.
The driving force behind this market share expansion is the increasing technical complexity. New ASIC chips are rapidly growing in size and the number of layers, and multi-chiplet designs—which integrate multiple chips—are becoming more widespread. There is also a growing trend toward embedding MLCCs into ABF to enhance power stability. The logic is that as complexity increases, SamsungElectroMechanics’ market share will expand.
In addition, a new product cycle involving glass substrates could begin as early as 2028, and price cycles for silicon capacitors and ABF are proving to be stronger and faster than initially anticipated.
Morgan Stanley determined that these outlooks are not yet fully reflected in the current stock price. The projected price-to-earnings (P/E) ratio for 2028 is 18x, which is significantly below the historical high of 30x, despite a stronger EPS growth rate.
The firm maintained its bullish scenario target price at 3 million won and lowered its bearish scenario target to 1.35 million won to reflect increased volatility.