[Click eStock] "Samsung SDI, Automotive Batteries to Lead Growth Next Year"

Operating Profit for Q4 Expected to Slightly Miss Consensus
Kiwoom Securities "Maintains Samsung SDI Target Price at 950,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Samsung SDI is expected to report fourth-quarter earnings this year that slightly miss market consensus. However, growth is anticipated next year, mainly driven by automotive batteries.

On the 16th, Kiwoom Securities estimated Samsung SDI's operating profit for Q4 this year at 411 billion KRW, a 67% increase compared to the same period last year. This figure is about 3.20% below the consensus.

The automotive semiconductor issue is also impacting Samsung SDI's performance. As the semiconductor problem prolongs, there are expected to be limitations on the increase in automotive battery sales. The electronic materials segment is also projected to see a decline in sales of polarizing films due to seasonal factors.

However, the energy storage system (ESS) segment is expected to see a significant increase in sales, supported by strong demand for high-value commercial uninterruptible power supplies (UPS) and home products. Additionally, the cylindrical battery segment is likely to achieve record-high performance, driven by solid demand in power tools, micro mobility, and electric vehicles.

From next year, automotive batteries are expected to lead growth. With the expansion of customers and models centered on Gen5 batteries, they are occupying a meaningful share of sales. As a mid-to-long-term strategy, Samsung SDI plans to maintain an annual production capacity expansion of 30-40% for medium-to-large batteries until 2024, and from 2025, the results of the joint venture with Stellantis in the U.S. are expected to be reflected.

The small battery and electronic materials segments are also expected to maintain profitability next year. The cylindrical battery segment is pursuing diversification of electric vehicle customers while entering the professional power tool market. In electronic materials, as the main customers foster their foundry (semiconductor contract manufacturing) business, sales opportunities for semiconductor materials, mainly spin-on hard masks (SOH), are expected to increase.

Accordingly, Kiwoom Securities maintained its investment opinion of "Buy" on Samsung SDI with a target price of 950,000 KRW. The closing price on the previous day was 674,000 KRW. Kim Ji-san, a researcher at Kiwoom Securities, explained, "The stock is being adjusted due to macro concerns such as supply shortages and inflation, as well as issues related to competitors' listings. A mid-to-long-term perspective suggests that a buying strategy during adjustments will be effective."

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