Mirae Asset Securities on the 2nd raised its target price for Samsung Electro-Mechanics by 115% to 2.8 million won from 1.3 million won. It said mid- to long-term growth in semiconductor substrates and multilayer ceramic capacitor (MLCC) businesses driven by expanded investment in artificial intelligence (AI) infrastructure is taking off in earnest. The previous trading day's closing price for Samsung Electro-Mechanics was 2,127,000 won.
Park Jun-seo, an analyst at Mirae Asset Securities, said, "A structural growth phase has begun for semiconductor substrates (FC-BGA) for AI servers and networks and for the capacitor business," and added, "On top of that, we expect the average selling price (ASP) of substrates to rise 20% from 2027, and MLCC ASP to rise 10%."
In particular, it judged that this AI cycle, based on multi-year long-term agreements (LTA), will surpass the MLCC glass substrate shortage in 2017–2018 and the electric vehicle cycle in 2021–2022.
Park assessed that as the competition to expand AI data centers lengthens, shortages in related component supplies are intensifying. Park said, "Starting this year, AI CAPEX by global big techs is expected to expand for several years," and explained, "With substrate supply effectively sold out, we are seeing continued advances such as customer prepayments, increased investment subsidies, and the signing of long-term exclusive contracts."
He added, "This means the AI bottlenecks felt by global customers are spreading beyond GPUs to core components such as substrates and MLCCs."
Accordingly, as in 2022 during the electric-vehicle upcycle when a two- to three-year forward valuation was applied, a target price was presented that discounts 2029 results in advance.
First, assuming that the average selling price (ASP) of MLCCs in 2027 will be raised by 10%, it viewed that AI MLCCs in particular will see a higher rate of increase, making it likely that the overall MLCC ASP hike will be revised upward further. Park explained, "Considering LTAs for customers' preemptive inventory buildup and acceptance of price increases, there is also a possibility that an increase exceeding the COVID cycle will be accepted."
Accordingly, the target price was calculated by applying a price-earnings ratio (PER) of 30 times, based on past upcycle levels, to 2029 earnings per share (EPS) of 93,242 won.