[Click eStock] "Samsung Electro-Mechanics to Perform Well in Q1 Results"

Daishin Securities Issues 'Buy' Investment Rating and Target Price of 155,000 Won... Closing Price on 26th at 99,200 Won

[Asia Economy Reporter Geum Bo-ryeong] Despite the impact of the novel coronavirus infection (COVID-19), Samsung Electro-Mechanics' first-quarter performance is expected to perform well, according to an analysis.

On the 27th, according to Daishin Securities, Samsung Electro-Mechanics' consolidated first-quarter results for this year are expected to be better than concerns. The operating profit estimate is 153.6 billion KRW, a 36.6% decrease compared to the previous year, but a 10.8% increase compared to the previous quarter.

Park Kang-ho, a researcher at Daishin Securities, explained, "Although there were concerns about a slowdown in sales due to decreased smartphone demand in China and production disruptions in some products caused by COVID-19, we judge the results to be favorable. The production disruptions of MLCC and camera modules due to COVID-19 were minimal, and with Samsung Electronics' premium smartphone (Galaxy S20) launch, the proportion of high-capacity MLCC and high-resolution camera modules increased, resulting in a mix effect that led to a strong margin rate."

Park's analysis suggests that this year, sales of MLCC and camera modules will increase due to replacement demand for 5th generation (5G) mobile communication service phones. He said, "Although there are concerns about a decrease in smartphones in the US and Europe in the second quarter, positive factors such as production normalization centered on Chinese smartphone and IT companies also exist. Considering that the production disruption issue in the first quarter will be resolved in the second quarter and the launch of deferred new models, the decline in estimated performance is judged to be limited. The MLCC market is expected to gradually recover, with an increase in average supply price due to a rise in the proportion of high-capacity products rather than overall quantity increase. Although IT product demand is expected to weaken, the expansion of 5G phone proportion within smartphones and diversification of sales into server and network sectors will lead to price increases. Semiconductor substrates are expected to see expanded FC CSP sales due to increased 5G phone demand," he added.

Daishin Securities gave Samsung Electro-Mechanics a 'Buy' investment opinion with a target price of 155,000 KRW. The closing price on the 26th was 99,200 KRW.