Samsung Electro-Mechanics sees share price target cut

South Korean brokerages have downgraded their target prices for Samsung Electro-Mechanics, following a significant earnings shock in the third quarter on Friday. 

Samsung's consolidated operating profit for the third quarter was 184 billion won ($135 million), a drop of 40.8% from the same period the previous year, as reported by Kim Ji-san, head of Kiwoom Securities research center. This was notably below the market consensus of 226.2 billion won.

Analysts believe the earnings shock resulted from a drop in multi-layer ceramic capacitor (MLCC) prices and a sustained decrease in demand for packaging substrates, such as the flip-chip ball grid array (FC-BGA).

They also highlighted potential challenges in the upcoming months, anticipating a sales decline in all divisions during the fourth quarter because of seasonal inventory adjustments.

Given these underwhelming results, securities firms have revised their target prices for Samsung downward. Kim Ji-san adjusted his target price from 190,000 won to 180,000 won.

Samsung Securities decreased its target price from 190,000 won to 165,000 won, and NH Investment & Securities set its target price at 170,000 won.

Both brokerages emphasized the current market unpredictability and the possibility of more challenges ahead.

By Sang Hoon Sung 

uphoon@hankyung.com