Meritz Securities analyzed on the 13th that given the comprehensive restructuring and the potential for performance growth at Samsung Electro-Mechanics, the current stock price could present an opportunity. They maintained a target stock price of 165,000 won and an investment opinion of 'buy.' The closing price of Samsung Electro-Mechanics on the previous trading day was 120,700 won.
Meritz Securities projected that the consolidated sales of Samsung Electro-Mechanics in the fourth quarter of this year would rise 2% from the previous year to 23.529 trillion won, and the operating profit would increase by 28.7% to 142.1 billion won. The operating profit is 13.7% lower than the market consensus.
Yang Seung-soo, a researcher at Meritz Securities, said, "Due to the sluggish demand in information and communication technology (IT), we have revised our forecasts down by 1.8% for sales and 7.2% for operating profit compared to previous estimates." He noted, "While industrial and automotive demand remains robust, uncertainty regarding the recovery of the IT market continues." He added that due to significant inventory adjustments compared to typical years, the utilization rate is expected to be lower than initially expected.
Meritz Securities forecasted a high potential for performance growth starting next year. Recently, concerns over upstream industries have caused the stock price of Samsung Electro-Mechanics to fall over 30% from its high this year. Researcher Yang stated, "Although shipment growth in the multi-layer ceramic capacitor (MLCC) sector has slowed, the average selling price (ASP) has risen 5.8% compared to the previous year," and added, "This ultimately indicates that the industrial structure of Samsung Electro-Mechanics is qualitatively improving."
Yang also estimated the proportion of servers and electronics in Samsung Electro-Mechanics' overall sales at 22.2%, projecting that this proportion will increase to 28.1% next year and 33.4% by 2026. He said, "While short-term results are disappointing, the severe inventory adjustments in the fourth quarter could be viewed as a positive factor for next year."