[Click e-Stock] "Samsung Electro-Mechanics Sales Outlook Downgraded... Target Price ↓"

On the 30th, KB Securities took a conservative approach to the sales outlook for application-oriented products of Samsung Electro-Mechanics. Accordingly, it maintained a 'Buy' investment rating but lowered the target price by 10% to 190,000 KRW.

Lee Chang-min, a researcher at KB Securities, stated, "We assumed a conservative sales outlook for application-oriented products due to continued weak demand in PCs and smartphones, and consequently revised down the compound annual growth rate (CAGR) of operating profit for 2023E?2027E from 22% to 16%."

The researcher analyzed, "Shipments to the IT sector fell short of expectations, and the sharp depreciation of the exchange rate in August and September (KRW/USD: 1,371 at the end of July → 1,320 at the end of September, currently 1,386) also negatively impacted third-quarter earnings. As of the third quarter, the application-wise composition of MLCC is estimated to be 57% for IT, 20% for industrial use, and 23% for automotive."

KB Securities forecasted Samsung Electro-Mechanics' fourth-quarter sales to increase by 5% year-on-year to 2.43 trillion KRW, with operating profit surging 53% to 168.3 billion KRW. The researcher assessed, "Sales to the IT sector are expected to decline due to inventory adjustments by customers, but the strong demand trend for server-oriented MLCC/FC-BGA, centered on AI servers, will continue."