[Click eStock] "Samsung SDI, Steady Earnings Improvement Expected"

[Asia Economy Reporter Song Hwajeong] Hi Investment & Securities maintained a 'Buy' rating and a target price of 1 million KRW on Samsung SDI on the 3rd, forecasting a continued steady improvement in its earnings.

Samsung SDI posted solid results in the third quarter of this year, surpassing market expectations thanks to strong performance in the electronic materials segment. Q3 sales reached 3.4 trillion KRW, and operating profit was 373 billion KRW, up 11% and 40% respectively compared to the same period last year. These figures exceeded market forecasts (sales of 3.6 trillion KRW, operating profit of 347.4 billion KRW). Jeong Wonseok, a researcher at Hi Investment & Securities, analyzed, "While the small battery and electronic materials segments performed very well, the medium-to-large battery segment was somewhat sluggish. In particular, the operating profit margin of the electronic materials segment greatly exceeded expectations by reaching 25%, driven by a high-value-added product mix of polarizing films and an increased sales ratio of OLED." Cylindrical batteries saw a significant increase in the proportion of high-capacity, high-priced products as shipments for non-IT, micromobility, and electric vehicles began in earnest. Polymer batteries also saw a sharp increase in shipments due to the launch of flagship new smartphones by major customers. However, shipments of medium-to-large automotive batteries, which were initially expected to increase sales, were partially delayed to Q4 due to production disruptions in electric vehicles caused by semiconductor shortages. As a result, additional profitability improvements were limited. Additionally, sales in the energy storage system (ESS) segment, which had been concentrated in the previous quarter, decreased by about 20% quarter-on-quarter, resulting in a loss.

A clear improvement in earnings driven by the battery division is expected in Q4 as well. Hi Investment & Securities forecasts Samsung SDI’s Q4 sales to increase 27% year-on-year to 4.1 trillion KRW, and operating profit to rise 84% to 453 billion KRW. Researcher Jeong explained, "In Q4, sales in the electronic materials segment are expected to decline due to a slowdown in demand for polarizing films entering the seasonal off-season, but the battery division’s performance improvement will be prominent. Cylindrical battery shipments are expected to expand across all application areas, and shipments of medium-to-large automotive batteries will increase about 24% quarter-on-quarter as shipment delays normalize." In particular, ESS sales are estimated to double quarter-on-quarter due to concentrated shipments of various high-profit projects, with profitability greatly improving and returning to profitability.

Researcher Jeong stated, "Among the three domestic battery companies, Samsung SDI is the most conservative in expanding production facilities, but it will show gradual growth through market share expansion centered on premium products. Major automakers are prioritizing electric vehicle production to meet annual carbon dioxide (CO2) emission regulations in various countries and to capture the rapidly growing electric vehicle market. In this process, Samsung SDI is expected to show steady earnings improvement in the medium-to-large battery segment using the Gen5 battery, which began mass production in Q4."

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