Samsung Electro-Mechanics: Momentum To Pick Up QoQ In Q2 2020

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About: SAMSUNG ELECTRO MECHANIC (SMSGF), Includes: INTC, MRAAY
by: Hyundai Motor Investment & Securities
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Hyundai Motor Investment & Securities
Long/short equity, Deep Value, growth at reasonable price, Korea
Summary

4Q19 sales missed our estimate by 5.6% due to larger-than-anticipated camera module inventory adjustments.

However, operating profit beat our forecast by 4.6% to come in at KRW138.7bn.

In 1Q20, we expect sales and operating profit to grow 11% and 40% QoQ to KRW2tn and KRW193.7bn.

Investment highlights

We maintain BUY and our six-month-forward target price of KRW155,000 (2.0x 2020F BPS) on SEMCO (OTC:SMSGF). At KRW1.84tn, SEMCO's 4Q19 sales missed our estimate by 5.6% due to larger-than- anticipated camera