Samsung Electro-Mechanics(009150) is surging early after being newly selected as Morgan Stanley's top pick among Korea tech stocks. The strength in semiconductor shares such as Samsung Electronics and SK hynix is also supporting the stock.
As of 9:01 a.m. on the 13th, Samsung Electro-Mechanics was trading at 1,508,000 won on the Korea Exchange, up 173,000 won (12.96%) from the previous session.
The driver behind the stock's rise was Morgan Stanley's positive assessment. Morgan Stanley replaced its top pick among Korea tech stocks from Samsung Electronics to Samsung Electro-Mechanics and raised its target price for Samsung Electro-Mechanics to 2.62 million won from 2.56 million won. It maintained an "overweight" rating.
It projected that stronger demand for multilayer ceramic capacitors (MLCC) and semiconductor substrates, driven by increased investment in artificial-intelligence (AI) data centers, will lead to improved earnings. In particular, it said Samsung Electro-Mechanics' profitability and earnings per share (EPS) are likely to beat market expectations on the potential for MLCC price increases and a recovery in demand for Ajinomoto build-up film (ABF) substrates.
It also offered a positive view on the rising share of AI-related business. Morgan Stanley said the share of AI-related business in Samsung Electro-Mechanics' revenue will climb from 20% this year to 31% next year, and it expects ABF revenue to see strong long-term growth.
The strength in semiconductor stocks on the U.S. stock market also buoyed sentiment. With the U.S. July consumer price index (CPI) matching market expectations and major semiconductor stocks such as Micron rising, Samsung Electronics and SK hynix are also showing early gains today.