[Click eStock] "Samsung SDI, Profitability Improvement Expected in Medium and Large Batteries... Target Price Up 8%"

Kiwoom Securities Report
Q3 Operating Profit Forecast of 217.9 Billion KRW

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a buy rating on Samsung SDI on the 6th, expecting that the profit contribution from the medium-to-large battery segment will become full-fledged in the second half of the year, and raised the target price by 8% from the previous level to 500,000 KRW.

Operating profit for the third quarter is estimated at 217.9 billion KRW, a 31% increase compared to the same period last year, surpassing market expectations (201.2 billion KRW). Better-than-expected performance in automotive batteries, small polymer batteries, and polarizing film segments is anticipated to drive strong results.

The automotive battery segment is expected to approach the break-even point in the third quarter and turn profitable in the fourth quarter, driven by a significant increase in shipments mainly of European PHEVs. The European electric vehicle market is estimated to surge by 213% and 171% year-on-year in July and August, respectively, supported by additional stimulus measures in major countries.

Small polymer batteries are expected to benefit positively from new flagship model launches by not only major customers but also clients in the U.S. and China. Both prices and shipment volumes are anticipated to improve. Cylindrical batteries are showing a favorable demand increase mainly in micro-mobility, and the small battery business division’s operating profit margin is expected to recover to a boom cycle level.

The polarizing film segment is experiencing strong demand for large TVs and inventory restocking demand from customers in the Greater China region. OLED materials are projected to achieve significant sales growth in the second half, supported by expanding demand for flagship smartphones and OLED TVs.

In the fourth quarter, operating profit is expected to reach 314.5 billion KRW, a 1463% increase compared to the same period last year. Performance improvement is expected to continue mainly in automotive batteries, ESS, cylindrical batteries, and OLED materials. Ji-san Kim, a researcher at Kiwoom Securities, said, “Sales of medium-to-large batteries will increase significantly in the second half, and small batteries will recover profitability to a boom cycle level, delivering results exceeding market expectations.”

Next year, the automotive battery segment is expected to demonstrate differentiated competitiveness by starting the supply of the 5th-generation battery applying High-Ni NCA cathode materials. Researcher Ji-san Kim added, “ESS demand for power use linked to renewable energy will drive growth as major countries strengthen green policies amid the COVID-19 environment. Small polymer batteries will benefit from favorable conditions if Samsung Electronics and Chinese competitors increase their smartphone market share due to Huawei sanctions.”

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