Why Jensen Huang singled out Samsung Electro-Mechanics: simultaneous MLCC and FC-BGA shortages [Yeomvely’s Secret Notes / 10, week 5, Sunday]
An independent exercise, not a statement by the video creator or verification of every claim in the video.
The same ROE can imply different PBRs as required returns and durability change
Assume a hypothetical company has book equity of 100, no growth and a constant annual profit paid entirely as cash dividends. Sustainable ROE of 20% produces annual dividends of 20; at a required equity return of 10%, the perpetuity is worth 20 ÷ 0.10 = 200, or a PBR of 2. With the same dividend and a required return of 15%, value is about 133.33 and PBR about 1.33. Even with a required return of 10%, lowering sustainable ROE to 10% gives annual dividends of 10, value of 100 and PBR of 1. A high ROE in a single year cannot therefore fix the valuation multiple.
Check for yourself
- Does the stated ROE reflect one-off or peak-cycle earnings, or sustainable profitability?
- Have required returns, growth, cash conversion and payout assumptions been examined together?
Limits of application
This no-growth dividend perpetuity uses book equity and annual dividends in one hypothetical currency unit, with rounded displayed values. It strongly assumes all profit is distributable cash and book equity is maintained. Actual reinvestment, debt, taxes, cycles and index composition are excluded; it does not estimate a justified PBR or price target for Samsung Electro-Mechanics or Korean equities.
- What to look for
- Understand how AI demand can create component, power and production-infrastructure bottlenecks, and the conditions for orders to become profits.
- Why it matters
- Distinguish contracts from expansion plans, company-specific benefit timing, executed shareholder returns and valuation assumptions when evaluating industry narratives and stock forecasts.
Timeline
8 segmentsThe speaker describes demand for high-specification FC-BGA substrates and MLCCs rising faster than capacity expansion and customer qualification. Samsung Electro-Mechanics’ official releases support AI-server component demand and long-term supply agreements, but do not independently confirm identical shortages across all specifications, the video’s lead-time figures or a particular customer’s request. Bottlenecks may offer pricing and product-mix opportunities while requiring scrutiny of investment costs, yields, delivery timing and customers’ procurement burdens.