Samsung Electro-Mechanics Hits Yearly High, Undervalued Compared to Japanese Competitors

[Asia Economy Reporter Oh Ju-yeon] On the 25th, Samsung Electro-Mechanics showed an upward trend. The stock price hit a new yearly high during the day based on analysis that it was undervalued compared to Japanese competitors.

As of 10:30 AM that day, Samsung Electro-Mechanics was trading at 155,000 KRW, up 2.32% from the previous trading day. During the session, it rose to 158,000 KRW, marking the highest price of the year.

In the third quarter of this year, following the shock of the novel coronavirus disease (COVID-19), demand for most IT products led by smartphones increased, normalizing the demand for multilayer ceramic capacitors (MLCCs). Demand for automobiles also increased, and with Japanese companies’ stock prices surpassing record highs accordingly, Samsung Electro-Mechanics’ relatively undervalued stock price was highlighted.

According to Hana Financial Investment, Japanese MLCC companies Murata and Taiyo Yuden recorded capacitor segment order amounts of 167 billion yen and 57 billion yen, respectively, in the second quarter of this year. Murata matched its previous highest amount from Q2 2018, and Taiyo Yuden exceeded its previous highest amount of 49.7 billion yen from Q3 2019. Despite somewhat conservative guidance from Japanese companies, their stock prices are setting new record highs.

Kim Rok-ho, a researcher at Hana Financial Investment, said, "Murata and Taiyo Yuden are recording new highs based on a favorable MLCC market. Taiyo Yuden, which has a correlation coefficient of 0.83 with Samsung Electro-Mechanics over the past three years, was trading at 4,415 yen, surpassing its previous highest price level from July 2018."

He added, "Nevertheless, Samsung Electro-Mechanics is trading at 150,500 KRW, below its previous highest price of 166,000 KRW from July 2018."

Samsung Electro-Mechanics, which closed at 151,000 KRW the previous day, is trading in the 155,000 KRW range, up over 2% that day. There is also analysis that if Samsung Electro-Mechanics’ stock price surpasses the previous high by more than 20% like Japanese companies, the stock price could rise to 200,000 KRW.

Researcher Kim said, "There is no reason for Samsung Electro-Mechanics to be neglected compared to the MLCC market and peer companies’ stock prices."