[Click eStock] "Samsung SDI 4Q Operating Profit Up 1500% YoY... Mid-to-Large Battery Growth Accelerates"

EV·ESS Both Expected to Generate Profit in the First Quarter
Expansion of Electric Vehicle Market Due to Eco-Friendly Regulations... Strengthening Dominance in the European Market Anticipated

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Samsung SDI is estimated to have posted solid results in the fourth quarter of last year. It is analyzed to be the first quarter in which profits were generated simultaneously from electric vehicles (EV) and energy storage systems (ESS). The growth in the medium-to-large battery segment is evaluated to have laid the foundation for mid- to long-term growth momentum.

On the 12th, Yuanta Securities forecast that Samsung SDI would record sales of 3.5799 trillion KRW and an operating profit of 325.8 billion KRW in the fourth quarter of last year. Compared to the same period last year, sales increased by 27%, and operating profit surged by 1519.1%.

Although sales in the small battery and electronic materials segments slightly decreased due to customer inventory adjustments entering the seasonal off-season, the growth in the medium-to-large battery segment drove the performance. Both EV and ESS are expected to grow significantly, making it the first quarter with simultaneous profits from both sectors.

With medium-to-large batteries on an upward trajectory, performance growth is expected to continue this year as well. Yuanta Securities estimated that Samsung SDI would achieve sales of 14.2726 trillion KRW and an operating profit of 1.2665 trillion KRW this year. Compared to last year's forecast, sales are expected to increase by 22.8%, and operating profit by 1266.5%. Researcher Kwangjin Kim of Yuanta Securities explained, "The combined contribution of the medium-to-large battery segment to the company's overall performance will approach 49% in sales and 30% in operating profit, as supply expands for both EV and ESS."

Although short-term negative factors such as provisions and lower-than-expected order expectations may arise, these are considered temporary noises, and the mid- to long-term growth of the secondary battery industry is expected to continue. Researcher Kim stated, "As major countries worldwide strengthen eco-friendly policies, the electric vehicle market is growing faster than expected," adding, "The importance of the European market, where environmental regulations are the strictest, is increasing." Samsung SDI currently has major European automakers such as Volkswagen and BMW as customers. The company is also expanding its second plant in Hungary, further strengthening its European market strategy.

Against this backdrop, Yuanta Securities raised Samsung SDI's target stock price by 47.5%, from 610,000 KRW to 900,000 KRW. The closing price the previous day was 730,000 KRW. The investment rating was maintained at 'Buy.'

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