[ Apple's AI Phone Strategy ] Impact on Leeno Industrial & Samsung Electro-Mechanics
- Apple's Strategic Shift: Apple is transforming the iPhone into a more powerful computing device, aiming to replace notebooks and PCs. This upgrade leverages AI and foldable technologies, potentially benefiting Korean firms like Leeno Industrial and Samsung Electro-Mechanics.
[ Leeno Industrial (057840.KQ) ]
- Company Description: Specializes in manufacturing inspection probes and semiconductor inspection sockets.
- Key Investment Insights
1. ARM's Performance Boost: Increased license sales signal a shift towards more profitable R&D-focused sales.
2. Expansion: Aiming to double production capacity by 2026.
3. Resilient Operations: Consistently maintains profitability, even in downturns.
- Valuation
Performance improvements suggest a revaluation is due. Currently, the next twelve months (NTM) P/E stands at 32x, meriting a premium for anticipated On-Device AI contributions.
The valuation floor is 20x NTM P/E, indicating a potential adjustment from the current 260,000 won to 150,000 won. Nevertheless, solid Q4'23 performance and AI-related optimism are likely to sustain stock prices. Strategy: Consider only trading around Apple's WWDC
[ Samsung Electro-Mechanics (009150.KS) ]
- Company Description: Operates in three IT component divisions, with significant exposure to Samsung Electronics, accounting for 33% of its sales. This links its fortunes closely to the Samsung Galaxy handset line.
- Key Investment Insights:
1. MLCC Industry Outlook: Anticipates a recovery in 2024, though confirmation is pending.
2. AI Phone Demand: The Galaxy S24 underscores the potential demand for AI phones, improving Q1'24 performance projections.
- Valuation
Due to its cyclical nature, the P/B ratio is a more reliable valuation metric than P/E. The stock is considered reasonably priced if it dips below 130,000 won.
With NTM P/E varying between 9x and 29x, an entry point at 14x NTM P/E suggests a fair price of 120,000 won (against a current 147,000 won).
The current P/B ratio is 1.4, within the historical range of 1.1x to 2.5x, justifying the current price at a P/B of 1.1x, valued at 125,000 won.
Note: For more detailed analysis, refer to the attached file (document in Korean).
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