[Click eStock] "Samsung Electro-Mechanics, Expected Benefit from Chinese Patriotic Consumption... Q4 Below Expectations"

Sangsangin Securities evaluated on the 13th that although Samsung Electro-Mechanics is expected to benefit from patriotic consumption of Chinese smartphones, its fourth-quarter performance will be below expectations. The target price was maintained at 190,000 KRW, and the investment opinion was kept as 'Buy'.

Researcher Jung Min-kyu said, "With the subsidy policy added to the trend of patriotic consumption of Chinese smartphones, the company is expected to benefit as it counts Chinese smartphone OEMs as its clients. Although competition with Chinese MLCC companies is intensifying, profitability is expected to increase year-on-year through structural improvement by expanding the proportion of high value-added products for automotive and artificial intelligence (AI) applications."

China's subsidy policy involves adding smartphones to the list of consumer goods eligible for support funds. When purchasing domestically produced smartphones priced below 6,000 yuan, a 15% subsidy on the sales price can be received.

The fourth-quarter performance is expected to fall short of consensus. Researcher Jung said, "Fourth-quarter sales and operating profit are expected to be 2.3325 trillion KRW, up 1.1% year-on-year, and 127.4 billion KRW, up 15.4% year-on-year, respectively, falling short of the FnGuide consensus (operating profit of 152.7 billion KRW). Although the proportion of automotive and AI applications continues to expand, we have lowered the performance forecast due to weak IT set demand and year-end inventory adjustments by clients."

However, profitability is expected to improve in the future, supported by a lineup of high-capacity and high-reliability products. Sales and operating profit for 2025 were revised upward by 14.3% and 6.4%, respectively, to 11.4454 trillion KRW and 928.3 billion KRW.

Researcher Jung added, "Although the overall IT set demand recovery in 2025 will be limited, the shipment proportion of AI devices is expected to increase, leading to a rise in MLCC units per device. Expansion of sales of automotive and server-oriented package substrates characterized by high capacity, high reliability, and large area is expected to improve both scale and profitability."