IBK Securities said on the 16th that even amid the KOSPI plunge, foreigners are expanding or maintaining their equity in Samsung Electro-Mechanics(009150), noting this shows they have a strong view of the growth potential of the products Samsung Electro-Mechanics makes. It maintained a "Buy" rating and raised its target price to 1.75 million won from 1.05 million won. Samsung Electro-Mechanics' previous day's closing price was 1.413 million won.
Kim Un-ho, an analyst at IBK Securities, said, "Foreign investors' behavior toward Samsung Electro-Mechanics is moving differently from other IT corporations," adding, "Foreigners have been expanding their equity since marking 37.5% on the 22nd of last month as the low."
On the 30th of last month, when the KOSPI index began to plunge, foreigners' equity ratio was 39.6%, and it was 40% on the 15th, a trend of maintaining their equity even during the plunge.
Even as foreigners reduce their equity ratios in companies related to artificial intelligence (AI), they have continued to show buying interest in Samsung Electro-Mechanics.
Kim said, "We interpret this as foreigners having a strong view of the growth potential for semiconductor substrates (FC-BGA) and multilayer ceramic capacitors (MLCC)."
IBK Securities estimated Samsung Electro-Mechanics' 2028 operating profit at 4.8 trillion won and EBITDA at 7.6 trillion won.
To meet demand, capital expenditures (CAPEX) are expected to surge starting this year. Samsung Electro-Mechanics is expected to execute in the next three years what would previously have taken 10 years.
Kim said, "This means the investment has been confirmed by the customer," adding, "We estimate this includes securing new FC-BGA customers alongside surging AI Semiconductor volumes, as well as demand for switching substrates to FC-BGA."
MLCC is also seeing concentrated demand for high-performance products, creating a supply shortage that is expected to lead to improved results, the note added. IBK Securities projected operating profit of 1.8 trillion won in 2026, 2.9 trillion won in 2027, and 4.8 trillion won in 2028, reflecting this.
Kim said, "We expect the operating profit recovery trend to continue from the 2023 low through 2028, with operating profit reaching 4.8 trillion won in 2028," adding, "This is because higher MLCC server mix will drive results, and the package business is expected to grow on a higher share of servers and application-specific integrated circuits (ASIC) tailored for AI."