[Click eStock] Samsung SDI Target Price Lowered from 340,000 to 290,000

Global Electric Vehicle Demand Declines... Smartphone Slump Also Affects
Hoping for a Rebound in the Second Half with Growing European Auto Battery Demand

[Asia Economy Reporter Minwoo Lee] Concerns over an economic slowdown amid the novel coronavirus disease (COVID-19) situation are shaking Samsung SDI's growth outlook. The first-quarter operating profit estimates have been cut by more than half, and the target stock price has dropped by 15% in just two months.

On the 23rd, Kiwoom Securities lowered Samsung SDI's target stock price to 290,000 KRW, about 15% down from 340,000 KRW on January 31. This is due to reduced expectations for the electric vehicle market amid fears of an economic recession caused by COVID-19. The previous trading day's closing price was 216,500 KRW. Ji-san Kim, a researcher at Kiwoom Securities, explained, "Automobile demand is sluggish, and production disruptions and halts among global original equipment manufacturers (OEMs) are compounding the issue, while the sharp drop in oil prices is diminishing the appeal of electric vehicles. However, Europe is favorably maintaining a high-growth trend based on new carbon dioxide (CO2) regulations."

Samsung SDI's first-quarter operating profit forecast also dropped from 72.3 billion KRW to 35.2 billion KRW, a decline of about 70% compared to the same period last year. It is analyzed that the sales decline of polymer and cylindrical batteries will be larger than expected amid weak demand for flagship smartphones and power tools. Among electronic materials, polarized films are inevitably affected by production disruptions in Chinese LCD manufacturing, and OLED materials are also expected to see sluggish shipments for smartphones. However, automotive batteries are expected to face no major disruptions in first-quarter shipments, mainly for European plug-in hybrid electric vehicle (PHEV) models.

Therefore, there is also an interpretation that expectations remain valid for a turnaround through automotive batteries in the European market in the second half of the year. Kiwoom Securities forecasts that Samsung SDI's automotive battery segment will shift to sales growth starting in the second quarter with the addition of new projects and will settle into a profit trend in the second half. Researcher Kim said, "The global electric vehicle market shrank by 7% year-on-year in January, but Europe surged by 121%. In February, the electric vehicle markets in Germany and France grew by 144% and 219% year-on-year, respectively. Samsung SDI's main customer BMW achieved global sales leadership in January with strong sales of PHEV models such as the 530e and 330e, resulting in robust automotive battery sales in the fourth quarter of last year."

This content was produced with the assistance of AI translation services.