[Click eStock] "Samsung Electro-Mechanics, Earnings Uptrend and AI Benefits Expected... Target Price Up"

Target Price Raised from 170,000 KRW to 180,000 KRW

Meritz Securities raised the target price for Samsung Electro-Mechanics from 170,000 KRW to 180,000 KRW on the 27th, emphasizing the need to enhance recognition of the company as a beneficiary of artificial intelligence (AI). The investment rating was maintained at 'Buy.'

Researcher Yang Seung-su of Meritz Securities explained, "With a clear upward trend in performance based on low inventory and the definite direction of benefiting from AI, the attractiveness within the industry is high," adding, "We are raising the fair price by reflecting the upward revision of 2024 estimates and the increased weighting in 2025 in the valuation calculation."

He expressed the opinion that there is a need to improve recognition of Samsung Electro-Mechanics as an AI beneficiary stock. Researcher Yang said, "Three benefits from AI are expected: increased capacity of multilayer ceramic capacitors (MLCC) per set due to AI, entry into a new replacement cycle driven by AI-equipped smartphones and PCs, and penetration into AI-oriented high-end substrates," adding, "At this point where all three directions are materializing, it is necessary to enhance recognition of the company as an AI beneficiary stock."

Performance is expected to exceed expectations. Researcher Yang stated, "Samsung Electro-Mechanics' first-quarter sales and operating profit are expected to be 2.4 trillion KRW and 173.1 billion KRW, respectively, surpassing the consensus (average securities firm forecast) by 1% and 5%," adding, "First-quarter MLCC shipments are expected to increase by 3.5% quarter-on-quarter, with prices rising by 2.0%." He continued, "Although the timing of a full-scale recovery in set demand remains uncertain, some order increases based on reduced inventory across automotive, industrial, and IT sectors have been detected, and this trend is expected to continue into the second quarter." Meritz Securities, considering that the third quarter is typically the IT peak season, forecasted that Samsung Electro-Mechanics' quarterly operating rate will rise from 77% in the first quarter to 81% in the second quarter and 85% in the third quarter this year. Researcher Yang said, "If demand recovery accelerates, an upward trend exceeding expectations is also possible."