Meritz Securities said on the 8th that the artificial intelligence (AI) momentum is strengthening across multilayer ceramic capacitors (MLCCs) and ABF substrates for Samsung Electro-Mechanics. It maintained a Buy rating and raised its target price to 310,000 won from 280,000 won. The previous trading day's closing price for Samsung Electro-Mechanics was 263,000 won.
Yang Seung-su, an analyst at Meritz Securities, said Samsung Electro-Mechanics is accelerating a shift in positioning from IT set-centered to a key AI infrastructure beneficiary next year, and is expected to enter a gradual re-rating phase.
Yang said, "For MLCCs for AI servers, given the product characteristics that require both ultra-small size and high capacity amid a structurally tight supply-demand trend, an oligopolistic structure centered on Samsung Electro-Mechanics and Murata is expected to continue," adding, "Murata's upward revision of MLCC content per AI server baseboard to 15,000–20,000 units from the previous 10,000–15,000 also supports the strong industry cycle."
Performance improvement in the package solutions division is also expected. He said, "Next year, the package solutions division will restore a double-digit operating margin for the first time in three years, backed by growth centered on ABF substrates," and added, "In particular, for AI-use ABF substrates, supply-demand imbalances will deepen due to larger sizes and more layers, and price pressure will intensify further as shortages persist in T-Glass, a core materials and supplies input."
Meanwhile, Meritz Securities estimated that Samsung Electro-Mechanics will post fourth-quarter revenue of 2.8 trillion won and operating profit of 228.2 billion won this year. Those figures are up 14.9% and 98.4%, respectively, from a year earlier.
Yang said, "Unlike a typical fourth quarter, there are no signs of year-end inventory adjustments," adding, "High utilization centered on AI servers and automotive electronics will continue."