Samsung Electro-Mechanics (009150.KS) Earnings Review: 3Q26 OP beat: Earnings growth momentum to continue from stronger AI tailwinds on MLCC and ABF; Buy

Samsung Electro-Mechanics (SEMCO) reported 3Q26 revenue of W3.8tn and operating profit of W691bn; revenue was slightly below GSe of W3.9tn but in line with Bloomberg consensus, while OP beat both GSe and consensus of W670bn/W660bn, driven by improved mix of high-value-add MLCCs and FC-BGAs. AI-driven MLCC demand should support further ASP upside, with data center MLCCs recording unprecedented growth and the company introducing its 'AI MLCC Law' (dies per AI GPU doubling each year, doubling MLCC content for GPU power delivery). Tight FC-BGA supply amid the shift to advanced packaging with larger substrates drives continued ASP growth. We raise 2026E/2027E/2028E EPS by 1%/2%/2%, lift our 12m TP to W2.5mn from W2.4mn, and reiterate Buy. Key downside risks are a stronger-than-expected industry MLCC supply increase and weaker demand for AI server/auto/smartphones.