iM Securities on the 9th raised its target price for Samsung Electro-Mechanics by 28% to 2.3 million won from 1.8 million won. It reflected the growth potential of the multilayer ceramic capacitor (MLCC), FC-BGA, and silicon capacitor businesses driven by rising demand for artificial intelligence (AI) servers.
Ko Ui-young, an analyst at iM Securities, said, "Samsung Electro-Mechanics is a representative AI components stock that can benefit simultaneously in the MLCC and FC-BGA markets," and noted, "We reflected the high likelihood that earnings estimates will continue to be revised up, driven by additional price hikes and SiCap (silicon capacitor) orders."
In particular, a positive view was presented on MLCC market conditions. iM Securities projects operating profit of 3.3 trillion won in 2027 on the assumption that the average selling price (ASP) of MLCCs rises about 20%, but said actual results could exceed that.
Ko said, "Contrary to expectations that server-use MLCC prices would rise first, prices for general-purpose MLCCs have started to climb," adding, "This is being led by second-tier players such as Yageo."
She added, "In 2017, Yageo raised prices four times, resulting in an annual selling price increase of more than 60%," and analyzed, "With the cycle now judged to be stronger and more sustained than then, there is room to see a greater price increase than in the past."
The third quarter is expected to be an important inflection point. That is because the information technology (IT) peak season begins and mass production of Nvidia's next-generation AI server platform Vera Rubin will get into full swing.
Ko said, "Apple's production plan is stronger than expected, and for Vera Rubin, the number of MLCCs per rack rises significantly compared with the previous generation," projecting that the expansion of AI servers will lead to improved MLCC supply-demand.
The silicon capacitor business was also cited as an additional factor for upward earnings revisions. She said that silicon capacitor orders have demonstrated the possibility of signing a long-term agreement (LTA), adding that depending on whether additional orders come in, earnings forecasts for 2027 and beyond could be revised higher again.
The FC-BGA business also has the potential for stronger-than-expected price hikes, according to the analysis. Customers are moving aggressively to secure limited supply allocations, and even semiconductor companies that had been conservative are offering more aggressive prices than before.
Ko said, "The company's FC-BGA utilization rate is expected to reach 100% in the second half of 2026," adding, "Stronger-than-expected selling price increases are likely to accompany this, raising expectations for profitability."
iM Securities forecast that Samsung Electro-Mechanics' operating profit will rise 110% and 32% year over year to 3.3 trillion won in 2027 and 4.3 trillion won in 2028, respectively.
Ko said, "Although short-term share price volatility has increased, given the direction of market conditions and the company's competitiveness within the industry, there is considerable room for further upward revisions to earnings estimates," adding, "It is this point that deserves attention."