[Click eStock] "Samsung Electro-Mechanics, Profitability Expected to Increase with MLCC Mix Improvement"

Hana Securities forecasted on the 22nd that Samsung Electro-Mechanics' profitability will increase due to improvements in the mix of multilayer ceramic capacitors (MLCC). They maintained a 'Buy' investment rating and raised the target price from the previous 185,000 KRW to 200,000 KRW.

Samsung Electro-Mechanics High-Capacity Ultra-Compact Multilayer Ceramic Capacitor (MLCC)

Samsung Electro-Mechanics is expected to record sales of 2.38 trillion KRW and an operating profit of 178.4 billion KRW in the first quarter of this year. These figures represent increases of 18% and 27%, respectively, compared to the same period last year. Kim Rok-ho, a researcher at Hana Securities, analyzed, "The favorable exchange rate environment and better-than-expected Galaxy S24 shipment volume contributed to this. The improvement in the MLCC mix is presumed to be due to stronger-than-anticipated automotive demand and generative artificial intelligence (AI) servers and data centers."

He added, "Due to on-device AI and other factors, the package segment is likely to achieve better profit margins than previously feared. Although uncertainty remains regarding overall IT demand, the potential for upward revisions in earnings exists because of generative AI," he said.

Kim explained that the key factor is the improvement in the MLCC mix. He stated, "The estimated proportion of generative AI servers and data centers within MLCC is currently only about 2%, but this share is bound to expand rapidly in the future. Considering the benefits to package substrates from on-device AI, the company's overall exposure to AI is expected to gradually increase," he added.