Goldman Sachs: Yageo (2327.TW) - Commodity MLCC Pricing Upcycle Begins as Capacity Shifts to AI; Buy, TP Raised to NT$1,490
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Goldman Sachs asserts that a major commodity multi-layer ceramic capacitor (MLCC) pricing upcycle is imminent, significantly benefiting Yageo. As a global leader holding roughly 25% of commodity MLCC capacity, Yageo is uniquely positioned to capitalize on tightening supply. The firm expects commodity MLCC prices to surge 93% and 84% year-over-year in 2027 and 2028, respectively, driving gross margins to 46% and 51%, resulting in record-high earnings per share.
This structural shift is primarily driven by major Japanese and Korean competitors accelerating their capacity reallocations toward AI-grade MLCCs. The AI segment's share of global MLCC capacity is projected to jump from 9% in 2025 to 32% by 2028. Consequently, non-AI MLCC industry utilization rates will approach 100% in 2028, aided by a 9% volume CAGR and inventory levels sitting 36% below decade peaks.
Goldman Sachs raised its 2026-2028 EPS forecasts for Yageo by 11% to 106%. Consequently, the 12-month target price was dramatically upgraded from NT$346 to NT$1,490, based on 2.6 times price-to-book and return on equity multiples aligning with 20-year peaks. Goldman maintains a Buy rating, noting a 42.6% upside from the current share price of NT$1,045. Yageo's revenue CAGR of 43% through 2028 vastly outpaces peers. Key risks include a potential slowdown in AI demand and faster-than-expected industry capacity expansion.