Meritz Securities has upgraded its target price for Samsung Electro-Mechanics, citing the ongoing growth momentum of key components essential for the artificial intelligence (AI) era, including multilayer ceramic capacitors (MLCC), silicon capacitors (Si-CAP), and Ajinomoto build-up film (ABF) substrates. The target price was raised from 1.9 million won to 2.1 million won, while maintaining a 'buy' rating.
Yang Seung-soo, a researcher at Meritz Securities, noted, "Although the recent stock price has seen a sharp decline, raising concerns about adjustments, the direction of the three core growth drivers remains unchanged." He added, "The demand for AI MLCC is increasing, leading to heightened concerns about supply shortages."
He further stated, "High-capacity MLCCs for AI servers are expected to enter a serious supply shortage phase starting in the second half of the year, and competition among major clients for long-term supply contracts is likely to intensify."
Yang explained that the demand for Si-CAP will continue to grow as clients expand their next-generation packaging technologies, emphasizing that as the importance of power stability and noise control increases, so too will the demand for Si-CAP.
He also pointed out that the ABF substrate market is experiencing significant supply-demand imbalances, with major competitors reportedly pushing for price increases of 15% to 20%. He assessed that Samsung Electro-Mechanics is likely to participate in price hikes based on a favorable supply environment.
Yang concluded, "If domestic and international expansion plans are formalized, there is potential for additional corporate value growth based on the long-term cycle of the industry and the expansion of client companies," reiterating the adjusted target price of 2.1 million won.
* This article has been translated by AI.
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