[Edaily Reporter kyoungeun kim ] On the 23rd, Meritz Securities maintained its “Buy” rating on SamsungElectroMechanics(009150)and raised its target price to 2.2 million won. This represents an upside potential of 48.0% compared to the current price of 1.486 million won.
Yang Seung-soo, an analyst at Meritz Securities, stated in a report released that day, “Third-quarter earnings are projected to exceed the market consensus (601 billion won) by 9.3%, with revenue of 3.82 trillion won (up 32.2% year-over-year) and operating profit of 657.1 billion won (up 152.4%, operating profit margin of 17.2%),” adding He added, “Driven by a combination of price hikes across distribution channels and an improved product mix centered on high-value-added artificial intelligence (AI) products, the operating profit margin of the Components Division is expected to exceed 20% for the first time in 18 quarters since the first quarter of 2022.”
The semiconductor package substrate (ABF) segment is also expected to continue performing well. Analyst Yang said, “Amid sustained high utilization rates, the operating profit margin is expected to exceed 30% as the expansion of supply for large-area ABF substrates—including application-specific integrated circuits (ASICs) for North American cloud service provider (CSP) Company A, switches and low-power processors (LPUs) for NVIDIA, and 6th-generation server CPUs for a North American central processing unit (CPU) client—all converge.”
Ball Grid Array (BGA) is also expected to defend against downward pressure on profitability, driven by the effects of sustained price increases, thereby contributing to the Package Solutions Division’s continued strong earnings performance.
Regarding MLCCs (multi-layer ceramic capacitors), he explained, “The applications for ultra-small, high-capacity AI products are expanding from AI accelerators to server CPUs, and it is understood that the company has already signed long-term supply contracts with North American CPU manufacturers.”
Analyst Yang stated, “Reflecting the upward revision of earnings estimates, we are raising the fair value to 2.2 million won,” adding, “The key point is that profit expectations continue to be revised upward despite the recent sharp deterioration in the exchange rate environment.”
This year’s full-year earnings are projected at 14.3998 trillion won in revenue and 2.0826 trillion won in operating profit (operating profit margin of 14.5%), and growth is expected to accelerate next year with operating profit reaching 4.6299 trillion won (operating profit margin of 23.5%).