[Click eStock] "Samsung SDI, Increased Profits from Medium and Large Batteries... Expectation of Stock Price Rise"

DB Financial Investment Report

[Asia Economy Reporter Minji Lee] On the 29th, DB Financial Investment maintained a buy rating on Samsung SDI, expecting sales growth due to strong earnings, and kept the target price at 920,000 KRW.

Samsung SDI recorded sales of 4.0494 trillion KRW and operating profit of 322.3 billion KRW in the first quarter, marking a year-on-year growth of 36.7% and 142%, respectively. This was the highest quarterly sales, and operating profit exceeded market expectations of 286 billion KRW by 10%, showing solid performance.

Due to the high proportion of raw materials in its business, rising raw material prices amid macroeconomic uncertainties could raise concerns about the company. However, the automotive battery segment minimized the impact of raw material price increases through sales price linkage and recorded profits by improving the product mix, including expanding the share of Gen 5. The ESS segment offset a decline in power supply products by increasing the proportion of high-value-added products such as home UPS.

In the second quarter, automotive battery sales increased by 15% compared to the previous quarter due to the expanded EV production ratio by automakers. Profit growth is also expected with the sales increase. The expansion of the EV share in small batteries is leading to significant sales growth, and the EV share within cylindrical batteries is expected to exceed 20% this year, up from less than 10% last year. The expected operating profit for the second quarter is 393.1 billion KRW, a 22% increase from the first quarter.

Seongryul Kwon, a researcher at DB Financial Investment, analyzed, “There are few large IT companies whose overall sales increase by more than 30%,” adding, “As medium-to-large batteries start generating profits, the stock price will respond accordingly.”

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