Battery Stocks Recharge Upward Momentum

Rising Trend on Q2 Earnings Expectations
Continued Inflow of Foreign and Institutional Buying Pressure

[Asia Economy Reporter Song Hwajeong] Battery stocks, which had been sluggish for a while, are recently gaining upward momentum again. Expectations for second-quarter earnings have continuously attracted buying from foreigners and institutions, driving up stock prices.

As of 9:15 a.m. on the 30th, Samsung SDI was trading at 695,000 KRW, up 9,000 KRW (1.31%) from the previous day. SK Innovation showed a strong gain of over 3%, turning positive after four days, and LG Chem rose more than 2%, continuing its strong performance for two consecutive days.

Battery stocks have regained their upward trend since the beginning of this month. Samsung SDI rose 11.54% until the day before today, LG Chem increased by 2.44%, and SK Innovation went up by 6.6%. These battery stocks had each hit record highs in January and February this year but showed sluggish price movements until last month.

Stock prices are being driven up by inflows of buying from foreigners and institutions. Foreign investors bought the most LG Chem this month, with net purchases of 531.8 billion KRW, followed by SK Innovation (246.4 billion KRW) and Samsung SDI (222.1 billion KRW), which also ranked high in net buying. During the same period, institutions made the largest net purchases of Samsung SDI, buying 266.6 billion KRW.

Han Sangwon, a researcher at Daishin Securities, analyzed, "In June, the stock prices of the secondary battery sector recorded a favorable return exceeding the KOSPI (3%). A change has begun to appear in the situation where the stock prices had not reflected positive factors such as strong global electric vehicle sales, announcements of Korean companies’ overseas expansions, and joint venture establishments." He added, "However, unlike last year when abundant liquidity fully reflected future growth potential, now growth beyond sales increase through profitability improvement has become important. The relative stock price strength of Samsung SDI and SK Innovation also reflects expectations for the electric vehicle battery business turning profitable."

Samsung SDI is expected to report a second-quarter earnings surprise. Shinhan Financial Investment estimated that Samsung SDI will record 3.389 trillion KRW in sales and 269 billion KRW in operating profit for the second quarter, surpassing market consensus. These figures represent increases of 32.4% and 158.6%, respectively, compared to the same period last year. Soh Hyuncheol, a researcher at Shinhan Financial Investment, explained, "Considering the automotive battery business turning profitable this year and an annual operating profit of 1.1522 trillion KRW, a 71.6% increase compared to the same period last year, we raised the target price by 5.5% to 950,000 KRW. Although secondary battery growth stocks underperformed due to the sharp rise in value and cyclical stocks in the second quarter, given the explosive growth of electric vehicles in the U.S. and China, a positive approach is now necessary."

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