Samsung Electro-Mechanics received a target price upgrade to 2.8 million won from Daishin Securities on July 7, with Q2 operating profit forecast at 423.9 billion won, exceeding the previous estimate of 387 billion won and consensus of 385.6 billion won by 9.5% and 9.9% respectively. The upgrade reflects strong demand for flip-chip ball grid array (FC BGA) and multilayer ceramic capacitor (MLCC) components used in artificial intelligence datacenters. Analyst Park Kang-ho cited AI infrastructure investment expansion and semiconductor high-spec trends as drivers, with supply shortages intensifying for these core components where Samsung Electro-Mechanics competes with Japanese manufacturers.
Daishin Securities Upgrades Samsung Electro-Mechanics Target Price to 2.8 Million Won
Daishin Securities maintained a buy rating on Samsung Electro-Mechanics and raised the target price from 2.4 million won to 2.8 million won, representing a 16.6% increase. Park Kang-ho stated the Q2 operating profit of 423.9 billion won would mark the highest level since Q3 2021 when the company recorded 445.8 billion won.
Q2 Operating Profit Forecast at 423.9 Billion Won Exceeds Consensus
Q2 revenue is projected at 3.279 trillion won, up 17.7% year-over-year and 2.2% quarter-over-quarter. Operating profit growth rates of 99.0% year-over-year and 51.1% quarter-over-quarter exceed revenue growth rates, indicating margin expansion. Park forecast quarterly operating profit to reach 513.1 billion won in Q3 and 529 billion won in Q4, setting new records.
Annual operating profit projections show 1.747 trillion won in 2026 (91.2% increase), 2.605 trillion won in 2027 (49.1% increase), and 3.11 trillion won in 2028 (19.4% increase). Earnings per share estimates for 2026 and 2027 were raised 12.6% and 27.1% respectively from previous forecasts.
AI Datacenter Component Demand Drives Revenue Growth
Park identified supply shortages for AI datacenter semiconductor and infrastructure components as the primary investment driver. He stated, "Server-oriented FC BGA and MLCC demand is exceeding expectations as AI datacenter infrastructure investment expands and semiconductor high-spec trends continue." The analyst noted Samsung Electro-Mechanics maintains pricing power and high order volumes in AI semiconductor and datacenter components where big tech and hyperscalers concentrate demand, forming competitive parity with Japanese rivals.
Mid-to-long-term contract ratios increased while some price increases proceeded, according to the report. Operating margin is projected to rise from 8.1% in 2025 to 13% in 2026, 17% in 2027, and 18.3% in 2028 as high-value product mix effects maximize.
FC BGA Business Revenue Projected to Reach 2.57 Trillion Won by 2027
FC BGA annual revenue is forecast to grow 71.2% to 2 trillion won in 2026 and increase over 28.9% to 2.57 trillion won in 2027 as AI server proportion rises. Park projected average supply prices will continue rising, reflecting increased layer counts, raw material cost increases, and supply shortages.
MLCC Business Secures 454 Billion Won Contract
Park highlighted MLCC business profitability improvements driven by server demand strength and supply constraints limited to Murata and Samsung Electro-Mechanics. He stated, "Orders are expanding due to supply limitations where only Japan's Murata and Samsung Electro-Mechanics can supply, and profitability will exceed expectations with high-value-centered revenue growth." The 454 billion won contract signed on the 29th of last month demonstrates increasing long-term contract proportions over short-term agreements.
Silicon capacitor revenue will contribute additional operating profit upside factors in 2027 as the component grows into a next-generation essential part for AI and datacenters, according to Park. He noted capacity utilization rates at Japanese and Samsung Electro-Mechanics MLCC facilities remain around 95%, creating conditions for price increases. Park assessed, "The possibility of further annual EPS upward revisions still remains."
FAQ
What target price did Daishin Securities set for Samsung Electro-Mechanics on July 7?
Daishin Securities raised the target price from 2.4 million won to 2.8 million won, a 16.6% increase, while maintaining a buy rating.
What is Samsung Electro-Mechanics' Q2 operating profit forecast?
Analyst Park Kang-ho forecast Q2 operating profit at 423.9 billion won, exceeding the previous estimate of 387 billion won by 9.5% and consensus of 385.6 billion won by 9.9%.
Which components are driving Samsung Electro-Mechanics' growth?
Flip-chip ball grid array (FC BGA) and multilayer ceramic capacitor (MLCC) components for AI datacenters are driving growth, with supply shortages intensifying and demand exceeding expectations.
