[Click e Stock] "Samsung Electro-Mechanics, Focus on Additional Profit Upward Revision"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained its 'Buy' rating and target price of 250,000 KRW on Samsung Electro-Mechanics on the 26th, emphasizing the need to focus on additional profit upgrades and expanded investments centered on high value-added products.

Park Kangho, a researcher at Daishin Securities, stated, "This year will mark the foundation for achieving annual operating profits exceeding 1 trillion KRW," and added, "We continue to maintain Samsung Electro-Mechanics as our top pick in the electrical and electronics sector."

Samsung Electro-Mechanics is expected to report a strong first-quarter consolidated operating profit of 331.2 billion KRW, a 100.6% increase compared to the same period last year, surpassing consensus estimates. Total sales are estimated to have increased by 12.6% to 2.4 trillion KRW. Park explained, "Although the first quarter is typically a low season, strong performance is expected due to high utilization rates of multilayer ceramic capacitors (MLCC) and semiconductor substrates (BGA, FC BGA), mix effects, and increased sales of camera modules for the Galaxy S21, which will expand operating profit margins." He added, "The annual operating profit for this year is estimated to reach a record high of 1.2498 trillion KRW, a 50.7% increase from the previous year."

Regarding MLCC, Park noted that considering mix changes and potential price increases, it is the right time for profit upgrades. He said, "Sustained demand for laptops and tablet PCs, larger TV sizes, and the 5G transition in smartphones will continue to drive demand for ultra-small, high-capacity IT components." He also mentioned, "At the same time, trends toward automotive electrification and autonomous driving will increase demand for automotive MLCCs, and due to supply constraints in the IT sector, price increases are expected in certain areas."

Supply constraints relative to demand are also expected to persist for semiconductor substrates. Park stated, "Due to increased PC demand and expanded server investments, there is a shortage in FC BGA supply, highlighting the possibility of price increases in some segments." He further explained, "Additionally, due to competitor factory fires and specification upgrades in smartphone APs, FC CSP prices are rising, which is expected to lead to additional sales growth."