[Click eStock] "Samsung SDI, Strong 1Q Growth... Operating Profit Expected to Increase by 113%"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment maintained a buy rating and a target price of 1.08 million KRW for Samsung SDI on the 25th, expecting significant growth in the first quarter of this year.

Samsung SDI's sales for the first quarter of this year are expected to reach 3.9 trillion KRW, a 31% increase from the previous year, and operating profit is forecasted to rise 113% to 283.6 billion KRW. Kim Hyun-soo, a researcher at Hana Financial Investment, explained, "Although there were concerns about a decrease in electric vehicle battery shipments due to semiconductor supply shortages and the war between Russia and Ukraine, it is estimated that the situation has not worsened significantly compared to previous conservative forecasts."

Medium-to-large batteries, which account for 46% of sales, are expected to record a 35% increase in partial sales compared to the previous year as demand for electric vehicle batteries continues to grow. However, due to production disruptions in electric vehicles caused by semiconductor supply shortages, the growth rate of battery shipments is expected to stagnate more than anticipated. Therefore, the profitability of this segment is analyzed to remain similar to the previous quarter due to increased depreciation expenses from operating expanded production lines. Additionally, the pace of profitability improvement in the electric vehicle battery segment remains slow.

Small batteries, accounting for 37% of sales, are expected to see a 32% increase in segment sales compared to the previous year, driven by strong demand for power tools and increased sales of cylindrical batteries for electric vehicles. Electronic materials are analyzed to continue seeing increased sales of polarizing films for high-end televisions and mobile devices. As a result, segment sales are projected to rise by 30%. However, due to the off-season for organic light-emitting diode (OLED) materials, a decrease in sales compared to the previous quarter is expected.

Researcher Kim said, "The current contract structure for electric vehicle batteries is such that increases in prices of key mineral resources like nickel and lithium are compensated by original equipment manufacturer (OEM) customers," adding, "Concerns about profitability deterioration due to recent raw material price increases are considered excessive."

He added, "However, the increased fixed cost burden due to semiconductor supply shortages continues to limit the speed of profitability improvement, and how automotive semiconductor companies like Infineon and Renesas signal supply improvements in the future will be an important factor for stock prices."

Furthermore, the passage of the U.S. BBB Act, which includes a subsidy of $12,500 (approximately 15.29 million KRW) for electric vehicles, is also analyzed to influence stock price rebounds.

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