Shares of Samsung Electro-Mechanics Co., the electronic parts making unit of South Korea’s Samsung Group, has renewed a 52-week high for the fourth day in a row on Tuesday on expectations that an anticipated supply shortage of its mainstay product multilayer ceramic capacitors (MLCC) would improve the company earnings.
Samsung Electro-Mechanics shares ended Tuesday at 128,000 won ($120.00), up 1.59 percent to a new 52-week high. The stock has been refreshing 52-week highs for four straight trading sessions.
Market analysts attributed an anticipated shortage in MLCC supply to the stellar performance of Samsung Electro-Mechanics’ shares in recent days.
Eugene Investment & Securities Co. revised up the company’s operating profit forecast for this year by 10.4 percent from its previous estimate, citing the supply shortage of MLCCs, a mainstay product of Samsung Electro-Mechanics. The brokerage forecast that, in particular, the supply of MLCC for IT products would remain tight for a while as Japanese MLCC makers are shifting away from IT MLCC to MLCCs for automotive electronics. The shortage in IT MLCC production would further up the MLCC price, which would be reflected in the company’s earnings this year, the brokerage added.
Accordingly, Eugene Investment & Securities revised upward Samsung Electro-Mechanics’ target stock price to 150,000 won apiece from 125,000 won.
An MLCC composed of multiple layers of ceramic and a metal layer acts as electrodes and stores and feeds electricity to electronics such as smartphone and tablet PC. Recently, as its usage has been expanded to other areas including self-driving cars, electric vehicles, and 5G chipsets, its demand has burgeoned.
To meet the growing demand for MLCCs across a wide range of sectors, some of Japanese MLCC suppliers including the industry’s top Murata have decided to stop producing or cut down production of IT MLCC products such as those for smartphones to focus more on MLCCs for automotive electronics, causing the overall supply shortage in the MLCC industry.
By Lee Dong-in and Cho Jeehyun
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