Samsung Electro-Mechanics and HMM: Earnings and Policy Tailwinds Highlight Investment Appeal

He suggested this drop could present a buying opportunity. Samsung Electro-Mechanics underwent a sharp correction recently as investor sentiment toward tech stocks weakened.

Choi Chang-rim stressed that as the AI data processing era arrives, not only semiconductors but also the peripheral components that make them work are seeing sharply rising usage and demand. Against this backdrop, Samsung Electro-Mechanics is expected to benefit by supplying core AI-related components. He identified Samsung Electro-Mechanics as a stock to view alongside Samsung Electronics, highlighting its status as an AI-era beneficiary.

Choi Chang-rim said the factories producing Samsung Electro-Mechanics' key products, MLCCs (multilayer ceramic capacitors) and FC-BGAs (flip-chip ball grid arrays), are currently running at full capacity. Even so, supply of these components remains tight in the market. He said this reflects strong demand for Samsung Electro-Mechanics' products and supports the potential for future earnings growth.

He stressed that the key investment point at present is that earnings and the share price are moving together. Since solid earnings growth is expected, he argued the current share price level could be an attractive entry zone. He said this earnings improvement outlook is likely to have a positive effect on investor sentiment.

Choi Chang-rim pointed out, based on a technical analysis of the Samsung Electro-Mechanics chart, that the share price has fallen excessively compared with other stocks. He judged this decline to be a zone that could well lead to inflows of bottom-fishing buying. He expressed strong confidence that a rebound would come without fail early in the next trading session, rating the likelihood of a near-term share price recovery highly.

Sung Ha-joon, MBN Gold Manager, identified Middle East geopolitical risk as the main reason HMM was able to post a recent strong rally. Stalled ceasefire and negotiations between the United States and Iran revived market uncertainty over the Strait of Hormuz. He analyzed that this raises the likelihood of logistics disruptions, pushing up shipping freight rates, and as a result shipping stocks like HMM showed strength.

Sung Ha-joon stressed that HMM's freight rate increase is not just a thematic trend but is being confirmed in actual figures. He cited the rapid rise in container freight rates during this year's intensifying Middle East conflict, and the fact that the first-half average SCFI (Shanghai Containerized Freight Index) has stayed about 15% above the same period last year. Given that these freight increases are reflected in earnings, he judged that HMM's share price is not at a bottom and that continuing an upward trend is the normal course.

The MARAD project is related to strengthening U.S. maritime shipping capacity, and from this perspective HMM, a major Korean container shipping line, could reasonably expect to benefit from such policy support. He analyzed that the MARAD project could serve as a long-term growth driver for HMM.