[Featured Stock] Samgi Reassessed as Secondary Battery Parts Supplier... First Half Sales Surpass Last Year's Total

[Asia Economy Reporter Hyungsoo Park] Samgi is showing strong performance. It appears that securities firms' analysis expecting it to be re-evaluated as a secondary battery parts company has influenced the stock price.

As of 9:21 AM on the 14th, Samgi is trading at 6,840 KRW, up 15.74% from the previous day.

Daishin Securities expects growth potential for Samgi as a secondary battery parts company and newly set a target stock price of 9,000 KRW. They applied a target price-to-earnings ratio (Target PER) of 14 times to the next year's expected earnings per share (EPS) of 653 KRW. The average PER for secondary battery parts companies is around 20 times, but considering the transition from its core automotive parts business to a secondary battery parts company, a 30% discount was applied.

Researcher Han Kyung-rae of Daishin Securities explained, "Samgi's eco-friendly vehicle parts sales are expected to grow by 207% from 2018 to 2022," adding, "Following LG Group, it plans to supply reducers to Hyundai Motor Group's electric vehicle models next year." He further stated, "As the customer's large-scale secondary battery expansion continues, mid- to long-term stock price rerating is also expected."

Samgi is a manufacturer of vehicle die-casting products such as engine parts, transmissions, chassis, and electric vehicle parts. It owns 71 casting facilities ranging from 350t to 3500t. Having established an integrated production system capable of everything from scrap material control to aluminum parts manufacturing, it ensures stable supply. It has also built an automated production system, providing a competitive advantage in relatively fast product delivery due to higher production efficiency compared to competitors. This year, the expected sales proportion by customer is Hyundai Motor Group 59%, Volkswagen 16%, LG Group 19%, and others 5%.

The high growth trend in electric vehicle parts sales continues. Samgi's main electric vehicle parts are motor housings and end plates. The end plate is a part that holds the battery module frame and protects the outer wall. Motor housings are supplied to LG Magna, and end plates to LG Energy Solution. It is understood that the end plate is mainly supplied to the customer. Sales of end plates are growing rapidly in line with LG Energy Solution's large-scale expansion. They are mainly supplied to the customer's European factories, where production capacity has increased more than fourfold from 15GWh in 2018 to 70GWh this year. The half-year sales of electric vehicle parts this year reached 52.2 billion KRW, already surpassing last year's annual sales of 45.9 billion KRW. With the customer's European factory production capacity expected to expand by 100GWh in 2023, mid- to long-term high growth is assured.

From next year, motor reducers will be supplied to Hyundai Motor Group's electric vehicle models. Hyundai is rapidly transitioning to electric vehicles. Considering that once applied to a model, supply continues according to the platform's usage period, mid- to long-term supply growth is expected in line with the expansion of electric vehicle sales.

Sales of 702.1 billion KRW and operating profit of 34.4 billion KRW are estimated for next year, representing increases of 14.7% and 68.2%, respectively, compared to this year. With the acceleration of automotive companies' transition to eco-friendly vehicles and the expansion of parts supply due to customers' secondary battery expansions, the proportion of eco-friendly vehicle parts sales is expected to rise to 28.6%.

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