[Click eStock] "Samsung Electro-Mechanics, Earnings Improvement After 1Q Low... Target Price Up"

Ebest Investment & Securities announced on the 24th that it has changed its target opinion on Samsung Electro-Mechanics from 'Neutral' to 'Buy' and raised the target stock price from 150,000 KRW to 180,000 KRW.

Samsung Electro-Mechanics' first-quarter performance this year was sluggish. Sales are estimated at 2 trillion KRW, down 25% from the same period last year, and operating profit is estimated at 123.7 billion KRW, a sharp decline of 70%. Due to the continued downturn in the industry, the annual operating profit for this year is expected to be 881.3 billion KRW, down 25.5% from last year.

However, it is judged that after bottoming out in the first quarter, the performance improvement trend remains valid, showing a 'low in the first half and high in the second half' pattern despite the sluggish industry conditions. The base effect from China's reopening (resumption of economic activities) was less than expected, so IT set companies still face significant inventory burdens. However, in the case of Samsung Electro-Mechanics' multilayer ceramic capacitors (MLCC), proactive inventory adjustments by companies have reduced the burden on operating rates, and growth in the automotive electronics sector continues.

Researcher Kim Kwang-soo of Ebest Investment & Securities said, "While the IT industry downturn continues, the expansion trend in business sectors such as automotive electronics and server/network is ongoing," adding, "We believe the performance is expected to improve, showing a 'low in the first half and high in the second half' trend, and we have sufficiently confirmed the stock price's downside rigidity."