[Click eStock] Samsung Electro-Mechanics, Severely Undervalued "Increase Weighting"

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 9th that it maintains a buy rating and a target price of 290,000 KRW for Samsung Electro-Mechanics, judging that the stock is severely undervalued compared to its performance.

Samsung Electro-Mechanics recorded its highest performance in 2021 with sales of 9.9125 trillion KRW and operating profit of 1.5203 trillion KRW. In 2022, although sales growth is expected to be 4% due to the business exit of RF-PCB in the substrate materials division, operating profit is projected to increase by 17%, setting a new record high operating profit again. Performance growth is possible due to improved fundamentals from mix enhancement in the Component Solutions division, a boom in package substrates in the Substrate Solutions division, increased shipments from major customers in the Module Solutions division, and expanded application of OIS. The 2022 operating profit of 1.7852 trillion KRW is 55% higher than 1.1499 trillion KRW in 2018.

Kim Rok-ho, a researcher at Hana Financial Investment, emphasized, "Nevertheless, the current stock price is not significantly different from the 2018 peak of 166,000 KRW," adding, "Since the stock price increase reflecting performance growth has not accompanied the valuation premium that should be applied, it is judged to be a time to increase weighting."

Meanwhile, the reason for the particularly weak smartphone shipments of Samsung Electronics in 2021 was due to difficulties in procuring its own AP amid semiconductor supply shortages. However, recently, there has been a possibility raised that the performance of its own AP may be better than expected, which is expected to alleviate uncertainties regarding Samsung Electronics' smartphone shipments in 2022. If Samsung Electronics' smartphone production stabilizes and shipments and sales develop favorably, investment sentiment toward Samsung Electro-Mechanics is also expected to improve.