While LG Chem Stumbles... Rising Samsung SDI

Steady Rise This Month... Reached Record High of 818,000 Won the Day Before
LG Chem Quietly Rises Amidst Growing Noise from Lawsuits and Recalls
"Samsung SDI, the Year of Battery Profit Turnaround"

▲Bird's-eye view of the Samsung SDI electric vehicle battery factory to be established in Hungary. (Provided by Samsung SDI)

[Asia Economy Reporter Minwoo Lee] Samsung SDI is on the rise. As LG Chem, the largest company by market capitalization in the secondary battery sector, falters due to a lawsuit with SK Innovation, investor sentiment seems to be shifting toward Samsung SDI, the second largest.

According to the Korea Exchange on the 18th, Samsung SDI recorded an intraday high of 818,000 KRW the previous day, marking a new record. Since closing at 734,000 KRW on the 29th of last month, it has shown a steady upward trend. As of 9:40 AM on the day, it stood at 804,000 KRW, slightly down from the previous day but up 9.7% since the beginning of the month. During the same period, LG Chem, the 'leader' in secondary batteries, rose by 4.4%, about half of Samsung SDI's increase.

LG Chem rose to 1,028,000 KRW on the 5th but has since declined. It fell about 7% from that day to the previous day, likely due to turmoil caused by a trade secret infringement lawsuit with SK Innovation. On the 10th, the U.S. International Trade Commission (ITC) ultimately ruled in favor of LG Chem, but since settlement negotiations remain, uncertainty is expected to continue. Another negative factor is the fire incidents in Hyundai’s electric vehicles equipped with LG Chem batteries. Following the Kona, fires also occurred in the Ioniq and Elec City models, with recall costs estimated to exceed 2 trillion KRW.

On the other hand, Samsung SDI has consistently attracted investor interest. Recently, foreign investors' buying has been prominent. Up to the previous day, foreigners have net purchased Samsung SDI shares worth 318 billion KRW. Except for the 8th of this month, they have continued net buying throughout. This contrasts with the previous month when they net sold 161.8 billion KRW. It is on track to surpass December of last year, the month with the highest net buying at 396.3 billion KRW. It has already exceeded November’s net buying of 304.5 billion KRW, the second highest monthly figure last year.

This is likely because Samsung SDI is expected to improve profitability to the extent that this year will be the first year of turning a profit in the electric vehicle battery sector. In the fourth quarter of last year, Samsung SDI posted consolidated sales of 3.2514 trillion KRW and operating profit of 246.2 billion KRW, increases of 15.3% and 1124.9% respectively compared to the same period the previous year. Although operating profit fell 25.3% short of market consensus, this was due to provisions set aside for fires in Ford electric vehicles equipped with Samsung SDI batteries in the second half of last year. From this year, the electric vehicle battery division is expected to officially turn a profit for the first time.

Changmin Lee, a researcher at KB Securities, said, "The European electric vehicle market has been growing faster than expected since the second half of last year," and predicted, "The operating profit ratio of the battery division will grow from 15% last year to 50% by 2025."

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