[Click eStock] Samsung Electro-Mechanics, Growing Expectations on Strong 2Q Performance

[Asia Economy Reporter Junho Hwang] Daishin Securities maintained its target price of 250,000 KRW per share for Samsung Electro-Mechanics on the 28th, judging that the company recorded strong performance in the second quarter of this year and that there is high expectation for its performance in the second half of the year.

Samsung Electro-Mechanics' operating profit was 360.1 billion KRW, up 0.6% year-on-year, meeting market expectations. Sales reached 2.46 trillion KRW, an increase of 2.1% compared to the previous year.

Daishin Securities viewed the component sales, including multilayer ceramic capacitors (MLCC), at 1.14 trillion KRW, down 5% year-on-year, as a burden. However, despite weakening front-end demand, the maintenance of stable average selling prices (ASP) due to mix effects and the expansion of automotive segment share, which sustained high operating profit margins, were evaluated positively. Sales of semiconductor substrates (package solutions) also increased, centered on high-spec PC CPUs and automotive flip-chip ball grid array (FC-BGA). Camera modules achieved favorable results due to increased supply to overseas smartphone makers and Tesla, despite a slowdown in sales to Samsung Electronics.

Daishin Securities forecasts operating profit of 381.8 billion KRW for the third quarter of this year. This takes into account the seasonal peak of all businesses, including MLCC sales growth, semiconductor substrates, and camera module growth. In particular, the share of automotive sales is expected to increase.

Researcher Kangho Park of Daishin Securities stated, "The expansion of automotive sales is a new growth opportunity," adding, "Additional improvements in profit margins are expected."