IBK Securities upgraded Samsung Electro-Mechanics' target price from 1.05 million won to 1.75 million won on the 16th, citing sustained foreign investor buying amid the recent stock market crash. Analyst Kim Un-ho attributed the 66.7% price target increase to strong long-term growth prospects for AI semiconductor substrates (FC-BGA) and multilayer ceramic capacitors (MLCC). Foreign ownership in Samsung Electro-Mechanics rose from a low of 37.5% on June 22 to 40% by the 15th, continuing to climb even as the KOSPI index plunged starting June 30, according to the IBK Securities report. The previous closing price was 1.413 million won. The sustained buying pattern reflects foreign investors' confidence in the company's AI-related product portfolio despite broader market volatility.
Foreign Investors Maintain Buying Position Through Market Volatility
Kim Un-ho stated that foreign investor behavior toward Samsung Electro-Mechanics differs from other IT companies. "Even as foreign investors reduced stakes in AI-related firms, they maintained consistent buying in Samsung Electro-Mechanics. This reflects high expectations for FC-BGA and MLCC growth," the analyst noted. According to the report, foreign ownership bottomed at 37.5% on June 22, then expanded to 39.6% on June 30 when the KOSPI crash intensified, and reached 40% by the 15th.
Samsung Electro-Mechanics Plans 4.7 Trillion Won CAPEX in 2025
IBK Securities projects Samsung Electro-Mechanics' capital expenditure for the year at 4.7 trillion won, significantly exceeding the historical annual level of approximately 1 trillion won. Kim explained this investment targets expanding AI semiconductor FC-BGA demand and securing new customers. "The company plans to execute 10 years' worth of past investment over the next three years. This represents investment backed by confirmed customers," the analyst stated. He added that the CAPEX accounts for surging AI semiconductor volumes, new FC-BGA customer acquisition, and demand from clients switching to FC-BGA substrates.
FC-BGA Revenue Forecast to Surge 87.6% in 2025
FC-BGA sales are projected to reach 2.1412 trillion won in 2025, an 87.6% year-over-year increase driven by AI ASIC and server chip demand expansion, according to IBK Securities. The proportion of server applications is expected to rise to the 60% range in Q2. For MLCC, the report anticipates benefits from AI server performance upgrades. While standard CPU servers use approximately 3,000 MLCC units, NVIDIA GB200-based AI servers require about 30,000 units. High-performance MLCC production consumes more manufacturing capacity than standard products, likely intensifying supply shortages.
MLCC Operating Margin Projected to Reach 35% by 2028
Kim forecasted that concentrated demand for high-performance MLCC will create supply constraints, driving earnings improvement. "We expect MLCC operating margin to climb to approximately 35% by the end of 2028 as product mix improves and prices rise," the analyst projected. IBK Securities estimates Samsung Electro-Mechanics' Q2 revenue at 3.4736 trillion won and operating profit at 439 billion won, representing quarter-over-quarter increases of 8.2% and 56.5% respectively. For the full year, the firm forecasts revenue of 13.7387 trillion won and operating profit of 1.764 trillion won, with operating profit expanding to 4.825 trillion won by 2028.
FAQ
Why did IBK Securities raise Samsung Electro-Mechanics' target price to 1.75 million won?
IBK Securities raised the target price from 1.05 million won to 1.75 million won on the 16th due to strong long-term growth prospects for AI semiconductor substrates (FC-BGA) and multilayer ceramic capacitors (MLCC), according to analyst Kim Un-ho's report.
What is Samsung Electro-Mechanics' projected CAPEX for 2025?
IBK Securities projects Samsung Electro-Mechanics' capital expenditure at 4.7 trillion won for the year, significantly exceeding the historical annual level of approximately 1 trillion won. The analyst stated this represents 10 years' worth of past investment to be executed over the next three years.
How much did foreign ownership in Samsung Electro-Mechanics increase during the recent market crash?
Foreign ownership rose from a low of 37.5% on June 22 to 40% by the 15th, continuing to climb even as the KOSPI index crashed starting June 30, according to the IBK Securities report dated the 16th.
