DB Securities projected on September 1 that Samsung Electro-Mechanics will continue its growth trajectory, driven by rising prices for multilayer ceramic capacitors (MLCC) and flip chip ball grid arrays (FCBGA). The firm maintained a 'buy' rating and raised its target price to 2 million won, indicating a potential upside of 37.2% from the previous closing price of 1,458,000 won on August 31.
Research analyst Jo Hyun-ji noted, "The average price for MLCCs aimed at IT distribution channels has increased by about 30%, with similar negotiations ongoing for direct IT transactions since June." She added that negotiations for data center products are also underway, with price increases of around 20% being discussed, depending on the product.
The outlook for the MLCC market remains positive. ODM companies are continuing to build inventory, and new order values for capacitors from Murata and Taiyo Yuden increased by 26% and 41%, respectively, compared to the previous quarter, reaching record highs as of the end of June.
FCBGA prices have also seen sequential increases since the beginning of the year. The proportion of high-value products is expanding, with server-grade products expected to make up nearly 70% of FCBGA sales next year, up from 60% this year. This trend is anticipated to further enhance performance contributions starting next year.
DB Securities forecasts Samsung Electro-Mechanics will report third-quarter revenues of 3.841 trillion won and operating profits of 621 billion won. This operating profit is 4.1% above the market expectation of 596 billion won and represents a 138.5% increase compared to the same period last year.
Jo emphasized, "Both MLCC and FCBGA face clear supply constraints and technical barriers, making further price increases likely. The growth potential led by the components division and package solutions remains strong, maintaining our view of a competitive advantage within the electronics sector."
* This article has been translated by AI.
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