[Click eStock] "Samsung Electro-Mechanics Target Price 210,000 KRW, Buy Rating Maintained"

Kiwoom Securities maintained a target price of 210,000 KRW and a buy rating for Samsung Electro-Mechanics on the 30th.

Samsung Electro-Mechanics reported third-quarter sales of 2.6153 trillion KRW, operating profit of 224.9 billion KRW, and an operating margin of 9%, meeting market expectations.

The Component Division saw IT set demand fall short of expectations, resulting in shipment volume and operating margin similar to the previous quarter.

The average selling price rose 4% quarter-on-quarter, driven by increased demand for AI servers and automotive applications, exceeding forecasts for the third consecutive quarter.

The Optical Communication Division's performance was better than expected despite decreased supply to China and North America, supported by increased sales of automotive cameras.

The package substrate segment recorded its highest-ever sales, driven by expanded market share of FC-BGA among customers and growth centered on servers, with continued profitability improvement.

Fourth-quarter sales are expected to be 2.4082 trillion KRW and operating profit 168.5 billion KRW, likely falling short of market consensus due to weak set demand and year-end inventory adjustments.

However, demand for high-value products such as AI and automotive applications remains solid, and with inventory stabilization compared to previous years, the decline in profit is expected to be milder than in 2022-2023.

Additionally, as planned, new supply of FC-BGA for AI accelerators will begin in earnest from the fourth quarter, and the proportion of AI-related performance is expected to continue expanding next year.

For 2024, sales are projected at 10.2 trillion KRW and operating profit at 781.8 billion KRW, with performance improvement driven by AI and automotive demand despite weak set demand.