[Click eStock] "Samsung SDI Expands EV Production Capacity... Strong Earnings"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 850,000 KRW for Samsung SDI on the 1st, based on the expectation of improved performance in the second quarter and the second half due to the expansion of production capacity for electric vehicle (EV) batteries.

The consolidated operating profit for the second quarter is estimated to grow 143% year-on-year to 262.7 billion KRW. This is expected to slightly exceed the previous estimate (241 billion KRW) and market consensus (246.5 billion KRW). Sales are analyzed to increase by 30% compared to a year ago, reaching 3.32 trillion KRW. Kangho Park, a researcher at Daishin Securities, stated, “Starting from the second quarter, both sales and operating profit have entered a phase of simultaneous growth compared to the previous quarter and the previous year,” adding, “Operating profit from medium-to-large batteries is expected to turn positive, laying the foundation for full-scale gains.”

The profitability of electronic materials and small batteries is also normalizing, and the profit scale in the second half is expected to increase significantly. Electronic materials sales are expected to grow centered on semiconductors and OLEDs. Polarizing films are anticipated to show better-than-expected performance due to increased market share and larger scale in China.

Investment points include the expansion of production capacity for cylindrical and pouch-type EV batteries and sales growth from existing customers, leading to expected profitability turnaround for medium-to-large batteries this year. In addition to the Hungarian plant, the possibility of establishing a new factory in the United States is emerging, which is positively evaluated as a means of securing clients. Researcher Kangho Park explained, “This can be interpreted as an active market response from a previously conservative production capacity expansion strategy,” and added, “The fact that some cylindrical batteries are reflected as EV sales next year is also judged to contribute to growth by responding to market changes.”

Operating profit is expected to expand further after the third quarter due to mix improvement. The operating profit for the third quarter is estimated at 333.1 billion KRW, and the annual operating profit is expected to reach a record high of 1.0763 trillion KRW. Researcher Park analyzed, “Cylindrical batteries are expected to see sales growth in the power tools sector due to economic recovery,” and “Electronic materials’ profitability will improve compared to the first half due to increased sales of semiconductor and OLED materials amid the stabilization of polarizing films.”

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