Mirae Asset Securities initiated a buy recommendation on Samsung Electro-Mechanics on the 6th, setting a target price of 2,800,000 won — implying upside of 40.8% from the current price of 1,989,000 won as of 3rd July.
The brokerage revised upward its second-quarter 2026 forecasts for the company, projecting revenue of 3.31 trillion won (up 18.9% year on year) and operating profit of 414.3 billion won (up 94.5% year on year). The operating profit estimate exceeds the market consensus of 385.6 billion won by 7.4%.
The primary driver behind the upgrades is a rise in the selling price of AI-grade multilayer ceramic capacitors (MLCCs) — passive electronic components used in virtually all electronic devices — and the successful pass-through of price increases to distribution-channel customers. Mirae Asset noted that producing a single AI-grade MLCC consumes the equivalent manufacturing capacity of three conventional MLCCs, meaning that a growing proportion of AI-related orders is rapidly eroding the total volume available for other customers.
The book-to-bill ratio — a closely watched measure of order backlog relative to shipments — among major global MLCC manufacturers has risen to between 1.3 and 1.5. Supply tightness is expected to intensify ahead of the third-quarter IT peak season and year-end pricing negotiations with automotive customers.
Mirae Asset also highlighted an unusual development: Samsung Electro-Mechanics has secured a one-year long-term supply agreement (LTA) for its 47-microfarad MLCC. IT customers typically commit to spot contracts of three to six months, making the emergence of an annual supply commitment a notable departure from industry norms.
In the FC-BGA substrate business — high-end circuit boards used in advanced semiconductors — operating leverage from early full-capacity utilisation continues to build. The product mix is also improving, with server CPU substrates migrating to higher layer counts (from around 20 layers to 26) and the addition of embedding substrates.
For the full year 2026, Mirae Asset projects Samsung Electro-Mechanics to record revenue of 13.54 trillion won and operating profit of 1.67 trillion won, implying an operating margin of 12.3% — a sharp improvement from 7.8% in the prior year.