[Click eStock] "Samsung SDI, Stock Price Gains to Widen in Second Half... Target Price Up"

[Asia Economy Reporter Oh Ju-yeon] Hanwha Investment & Securities stated on the 4th that "a virus cannot stop the transition to electric vehicles" regarding Samsung SDI. Although the impact of the novel coronavirus infection (COVID-19) is expected to continue the sluggish performance of the first quarter into the second quarter, considering the possibility of a sharp improvement in 2021 performance, the stock price increase in the second half of the year is expected to be even greater.

Hanwha Investment & Securities evaluated that Samsung SDI's first-quarter sales of 2.4 trillion KRW and operating profit of 54 billion KRW exceeded the lowered market expectations.

Researcher Lee Soon-hak of Hanwha Investment & Securities explained, "There was initially company guidance that the small battery business, including cylindrical batteries, would temporarily underperform, and it is judged that the effect of the won-dollar exchange rate rising by more than 3% after COVID-19 was reflected." He added, "Automotive battery sales decreased by 18% quarter-on-quarter due to seasonal factors but were better than expected." He also diagnosed that the electronic materials business recorded results at the expected level through semiconductor industry improvement and steady increases in polarized film supply centered on large TVs.

For the second quarter, sales are forecasted at 2.4 trillion KRW and operating profit at 56.4 billion KRW. It is analyzed that the weakness in front-end demand will become more pronounced as the impact of COVID-19 intensifies.

Researcher Lee predicted, "Due to the sharp decline in smartphone demand, polymer battery supply will decrease, and automotive battery sales are expected to decline due to factory shutdowns of major European OEMs. The only demand expected to recover is for cylindrical batteries, but this should also be viewed conservatively."

However, he noted that it should not be viewed only negatively and expressed expectations that demand will rapidly improve until next year once the COVID-19 impact is resolved.

Researcher Lee forecasted, "Although the short-term performance outlook has been lowered reflecting the COVID-19 impact, 2021 performance is expected to grow rapidly to nearly 1 trillion KRW in operating profit."

He said, "While demand for internal combustion engines is sharply declining, electric vehicle demand is only slightly decreasing. Since major automotive OEMs have already shifted their strategies to electric vehicles, the transition speed to electric vehicles is expected to accelerate, and the stock price is expected to move in anticipation of this."

Accordingly, the investment opinion was maintained as 'Buy,' and the target stock price was raised from the previous 300,000 KRW to 370,000 KRW.

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