[Click eStock] "Samsung SDI, Steady Growth Despite Semiconductor Supply Shortage"

Maintaining Profitability in Battery Sector Despite Declining Electric Vehicle Demand
Growth Expectations Rise with Eased Supply Shortages Next Year

[Asia Economy Reporter Minwoo Lee] Despite a slight slowdown in demand for secondary batteries for electric vehicles amid a shortage of automotive semiconductors, Samsung SDI is expected to post solid results in the fourth quarter of this year. It is anticipated that profitability will improve significantly as fixed cost burdens ease once the semiconductor supply shortage is resolved.

On the 14th, Hana Financial Investment maintained its 'Buy' rating and target price of 1.2 million KRW for Samsung SDI based on this outlook. The closing price on the previous day was 703,000 KRW.

The fourth-quarter earnings are expected to be 4.13 trillion KRW in consolidated revenue and 418.4 billion KRW in operating profit, representing increases of approximately 27% and 70%, respectively, compared to the same period last year. However, the operating profit estimate was slightly lowered from the previous 426.8 billion KRW. This is due to a slightly lower-than-expected order volume for electric vehicle secondary batteries from customers in the fourth quarter caused by the shortage of automotive semiconductors. As a result, the average operating rate of the medium-to-large battery segment decreased, and fixed costs increased, making a decline in operating profit margin inevitable. Nevertheless, it is expected that the annual profitability structure of the electric vehicle battery segment can be maintained.

The growth in sales of electric vehicles using cylindrical batteries is also a positive factor. Starting next year, as production disruptions caused by semiconductor shortages ease, the sales composition, which has so far been centered on plug-in hybrid electric vehicles (PHEVs), will be reorganized toward battery electric vehicles (BEVs), leading to a significant increase in sales. Hyunsoo Kim, a researcher at Hana Financial Investment, predicted, "In particular, with the full-scale sales of EV cylindrical batteries to companies like Rivian and BMW, sales growth and profitability improvement will accompany each other."

Accordingly, the valuation discount is also expected to be resolved. Researcher Kim explained, "This year, the proportion of orders with raw material price volatility compensation from customers significantly increased, leading to an expectation of over 5% operating profit margin in the electric vehicle battery segment. However, in the short term, production disruptions due to semiconductor shortages have translated into fixed cost burdens, slowing profitability improvement. Next year, as the semiconductor supply shortage gradually resolves, the stock price of Samsung SDI, which has been stagnant for the past year, is expected to resume its upward trend."

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