[Edaily Reporter Shin Ha-yeon ] On the 1st, DB Securities raised its target price for SamsungElectroMechanics(009150)from 1.6 million won to 2 million won, noting that price hikes for both multilayer ceramic capacitors (MLCCs) and flip-chip ball grid arrays (FCBGAs) are gaining momentum amid supply constraints. The firm maintained its “Buy” rating. This represents an upside potential of 37.2% compared to the closing price of 1,458,000 won on the 31st of last month.

Jo Hyun-ji, an analyst at DB Securities, stated, “MLCC price trends can be broadly categorized into three segments,” adding “The IT distribution channel segment, which accounts for just over 10% of MLCC sales, has seen average prices rise by about 30%. The IT direct sales segment, accounting for about 30%, has been undergoing individual negotiations since June with increases similar to those in the distribution channel. The data center segment, accounting for about 20%, is currently in individual negotiations with price increases varying by product but generally around 20%.”

In particular, analysts note that conditions remain favorable for suppliers in direct MLCC price negotiations. Researcher Cho explained, “While there is liquidity, we understand that manufacturing contracts are being finalized at levels more favorable than current delivery prices,” adding, “Order volumes also appear to be maintained at conservative, minimum levels due to a general trend among ODMs to build up inventory.”

Price hike trends are also continuing among MLCC competitors. Analyst Cho pointed out, “New capacitor order values for Murata and Taiyo Yuden also hit new all-time highs as of the end of June, further supporting the strong market boom.”

The company also forecasts that FCBGA will see simultaneous increases in selling prices and improvements in product mix. SamsungElectroMechanics is pursuing differentiated price increases by customer and product, and this trend toward price hikes has been confirmed in recent negotiations with customers.

Analyst Cho stated, “In the case of FCBGA, we understand that differentiated negotiations are underway by customer and product, and that sequential price increases have been implemented since the beginning of the year; the company is proactively focusing on product groups with relatively lower added value first,” adding “Given the expected increase in the share of high-value-added products—with the server-grade segment’s share within FCBGA projected to rise from 60% in 2026 to nearly 70% in 2027—the contribution to earnings is expected to grow even more sharply starting in 2027,” he added.

DB Securities also projected that SamsungElectroMechanics’ third-quarter earnings would exceed market expectations. It forecast third-quarter revenue of 3.841 trillion won, a 32.9% year-over-year increase, which would exceed the consensus estimate of 3.784 trillion won by 1.5%. Operating profit is estimated to surge 138.5% to 621 billion won, exceeding the consensus estimate of 596 billion won by 4.1%.

By division, third-quarter revenue is projected at 1.966 trillion won for Components, 927 billion won for Optical Communication Solutions, and 948 billion won for Packaging Solutions. Operating profit is estimated at 395 billion won, 34 billion won, and 191 billion won, respectively. In particular, the operating profit margin is expected to rise to 20.1% in the Components segment and 20.2% in the Packaging Solutions segment.

Annual performance is also expected to show a sharp improvement. DB Securities projected SamsungElectroMechanics’ revenue for this year to reach 14.179 trillion won—a 25.3% increase year-over-year—and operating profit to rise 112.5% to 1.941 trillion won. For next year, the firm expects revenue to reach 18.622 trillion won and operating profit to reach 3.921 trillion won, representing increases of 31.3% and 102.0%, respectively. The operating profit margin is also expected to rise from 13.7% this year to 21.1% next year.

The possibility of further upward revisions to the earnings forecast was also left open. Analyst Cho emphasized, “The company’s significantly changed enterprise value may now align with current market expectations,” adding, “Given the significant implications of a landscape where bargaining power has shifted to suppliers—going beyond a simple supply-demand imbalance—the possibility of further upward revisions to the 2027 estimates remains.”

He added, “We believe there is a high likelihood of further increases in the price-to-earnings ratio (PER) for both MLCCs and FCBGAs due to supply constraints, capacity erosion, and technological barriers,” noting, “Improvements in growth, profit margins, and product mix are beginning to become evident in both the Components Division and the Package Solutions Division.”