[Click e-Stock] "Samsung Electronics Smartphone Recovery Phase, Buy Samsung Electro-Mechanics"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 17th that it maintains a buy investment opinion and a target price of 290,000 KRW for Samsung Electro-Mechanics, expecting record-high sales and operating profit this year as well as last year.

Kim Rok-ho, a researcher at Hana Financial Investment, said, "Despite Samsung Electro-Mechanics achieving record-high performance in 2021, the stock price did not correspond accordingly due to concerns that a long-term inventory adjustment of multilayer ceramic capacitors (MLCC), an electrical energy storage device, would recur as in 2019, and due to sluggish shipments of Samsung Electronics smartphones." He added, "On the contrary, it is estimated that the MLCC inventory adjustment will be concluded shortly, and the stock price is expected to rise during the period when Samsung Electronics smartphone shipments recover."

Samsung Electro-Mechanics is expected to report 4Q sales of 2.3616 trillion KRW, up 13% year-on-year, and operating profit is forecast to surge 25% to 316.5 billion KRW. Sales meet market expectations, but operating profit is about 13% below expectations. Last year, record-high performance was achieved despite estimated one-time costs. Researcher Kim said, "Component Solutions experienced both price and volume lower than expected due to year-end inventory adjustment of MLCCs."

South Korea's ceramic capacitor export value began to decline year-on-year from September last year, showing trends of -12% in September, -10% in October, -2% in November, and +1% in December. During the previous boom from February 2017 to April 2019, exports increased year-on-year but then decreased for 12 consecutive months from May 2019 to April 2020. Researcher Kim stated, "This time, there was a year-on-year increase from May 2020, just after the initial outbreak of COVID-19, until August last year," adding, "Unlike 2019, this is interpreted as entering a short-term adjustment completion phase rather than a long-term slump." Since Samsung Electronics smartphone shipments are also expected to benefit from a low base effect compared to the previous year, sales are projected to increase by 8% and operating profit by 18% this year.