IBK keeps Samsung Electro-Mechanics target at 1.75 million won after raising forecasts
In short
IBK Investment & Securities kept its Buy rating and 1.75 million won target price on Samsung Electro-Mechanics on 20 October. It raised its earnings forecasts, including a third-quarter operating profit estimate of 666.8 billion won, but said the share price is not keeping up with the improvement.
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IBK Investment & Securities said on 20 October that earnings at Samsung Electro-Mechanics continue to improve but the share price has not fully reflected this. It kept its Buy rating and its target price of 1.75 million won. The previous trading day's close was 1.17 million won, and Maeil Business said the target implies upside of about 49.6%. [ 1 , 2 , 3 ]
Analyst Kim Un-ho (김운호) forecast third-quarter operating profit of 666.8 billion won and revenue of about 3.8 trillion won, both above earlier estimates. Maeil Business gave the revenue figure as 3.8313 trillion won, up 32.6% from a year earlier, with operating profit up 156.2%. It said the operating profit forecast was raised 9.8% from 607.5 billion won, and that the operating margin is expected to rise from 12.7% in the second quarter to 17.4%. [ 1 , 2 , 3 ]
IBK also raised its full-year forecasts to revenue of 14.46 trillion won and operating profit of 2.19 trillion won. Maeil Business said the previous figures were 14.0969 trillion won and 1.9559 trillion won, and that this year's operating profit would be more than double last year's 913 billion won. Chosun Ilbo said forecasts for every quarter after the third quarter were raised, along with operating profit forecasts for 2027 and 2028. Maeil Business said the 2027 operating profit forecast rose from about 3 trillion won to 4.4 trillion won. [ 1 , 2 ]
Kim attributed the improvement to the package substrate and component divisions, where product mix and price increases are lifting revenue and profitability together, and where investment in capacity is expected to add to results. Maeil Business reported IBK forecasts of third-quarter operating margins of 21.9% for the package division and 22.2% for the component division, and a 9.6% fall in optical division revenue. [ 1 , 2 , 3 ]
The report pointed to demand for multilayer ceramic capacitors (MLCC) and package substrates. Samsung Electro-Mechanics disclosed MLCC-related orders of about 4 trillion won in the second half of this year, including silicon capacitors, of which about 2.4 trillion won is 2027 MLCC volume. For package substrates, Kim said customers lead the investment and guarantee minimum utilisation. He called the timing of that investment, after 2028, encouraging because it runs against recent concern that memory demand will peak in 2027. [ 1 , 2 , 3 ]
Kim said concern about the AI industry is limiting the share price. He cited rising interest rates and slower growth of large AI models, which he said have raised uncertainty over the revenue outlook. Maeil Business reported the shares had fallen 16% in the month to 19 October. In Kim's words, worries about growth are rising despite various growth signals, and this mood is spreading across AI-related suppliers. [ 1 , 2 , 3 ]
IBK held the target price because the valuations of comparable companies Ibiden and Murata fell, according to Chosun Ilbo and Maeil Business. Chosun Ilbo said the forecast 12-month EBITDA for Samsung Electro-Mechanics was raised significantly. [ 1 , 2 ]
Why it matters
The note shows a broker raising earnings estimates while leaving its price target unchanged, because lower valuations of comparable companies and worries about the AI industry weigh on the shares. It is one analyst's view, reported by three business outlets.
Key facts
- IBK Investment & Securities kept its Buy rating and 1.75 million won target price on Samsung Electro-Mechanics on 20 October. [ 1 , 2 , 3 ]
- The previous close was 1.17 million won; Maeil Business said the target implies about 49.6% upside. [ 1 , 2 ]
- Analyst Kim Un-ho (김운호) forecasts third-quarter operating profit of 666.8 billion won and revenue of about 3.8 trillion won, both above earlier estimates. [ 1 , 2 , 3 ]
- Full-year forecasts were raised to revenue of 14.46 trillion won and operating profit of 2.19 trillion won. [ 1 , 2 , 3 ]
- Samsung Electro-Mechanics disclosed MLCC-related orders of about 4 trillion won in the second half of this year, including silicon capacitors; MLCC volume for 2027 alone is about 2.4 trillion won. [ 1 , 2 , 3 ]
- Kim said concern about growth in the AI industry, including interest-rate rises and slower growth of large AI models, is limiting the share price. [ 1 , 2 , 3 ]
Confirmed by several sources
- IBK Investment & Securities maintained a Buy rating and a 1.75 million won target price on Samsung Electro-Mechanics on 20 October. [ 1 , 2 , 3 ]
- IBK forecasts third-quarter operating profit of 666.8 billion won, above its earlier estimate, and raised its full-year revenue and operating profit forecasts to 14.46 trillion won and 2.19 trillion won. [ 1 , 2 , 3 ]
- The MLCC orders disclosed in the second half total about 4 trillion won including silicon capacitors, of which about 2.4 trillion won is 2027 MLCC volume. [ 1 , 2 , 3 ]
- Kim said the target price was held despite higher earnings forecasts because lower valuations weighed more. [ 1 , 2 , 3 ]
Still unclear
- Whether Samsung Electro-Mechanics will reach the forecast third-quarter figures. The figures are IBK's forecasts; no document gives reported results.
- Detailed division and growth figures, such as year-on-year growth of 32.6% in revenue and 156.2% in operating profit and the 4.4 trillion won 2027 operating profit forecast. Only Maeil Business gives these figures.
- Whether the AI-related concerns will ease. The documents describe the concerns as uncertainty and give no outlook on when they might fade.