[Click eStock] "Samsung SDI, 2Q Profitability Expected to Remain Strong... Target Price Maintained"

[Asia Economy Reporter Myunghwan Lee] Shin Young Securities announced on the 19th that it maintains a buy rating and a target price of 810,000 KRW for Samsung SDI. The reason is that the company is expected to deliver results exceeding market expectations in the second quarter of this year, making it an attractive investment.

Shin Young Securities forecasts Samsung SDI's second-quarter sales this year at 4.78 trillion KRW and operating profit at 428 billion KRW. The operating profit margin is expected to be 8.9%. This surpasses the previous market estimates of 4.64 trillion KRW in sales and 384.4 billion KRW in operating profit.

By segment, sales in the medium-to-large battery division are projected at 2.26 trillion KRW with an operating profit margin of 3.4%. This is attributed to price increases passed on due to rising metal prices, the exchange rate effect, and expanded sales centered on the next-generation battery 'Gen.5.' Shin Young Securities analyzed that the Gen.5 battery contributed to profitability improvement as its share of medium-to-large battery sales increased to 20% in the second quarter due to increased shipments to BMW and an expansion in the number of installed models. They expect the sales proportion of Gen.5 batteries within the medium-to-large segment to rise from 10% at the end of last year to the high 20% range in the second half of this year.

The small battery division's second-quarter sales are expected to be 1.7 trillion KRW with an operating profit margin of 11%. This is due to price increases and an expanded share of electric vehicle (EV) applications. The small battery division maintained solid growth in both non-IT and EV applications in the second quarter. It was noted that, compared to competitors, the division was not affected by China's lockdowns, and the production volume of Rivian, which uses EV cylindrical batteries, increased by 75% quarter-on-quarter to 4,400 units in the second quarter, which had a positive impact.

Shin Young Securities expects the operating profit margin of Samsung SDI's energy solutions division, excluding the electronic materials segment, to expand to 6.9% in the second quarter. They also anticipate that the supply of automotive semiconductors and disruptions in vehicle production will ease in the second half of this year, leading to a recovery in electric vehicle sales in Europe, a region with a high sales proportion.

Researcher Jinsu Park of Shin Young Securities stated, "From the fourth quarter, Gen.5 supply to new customers is scheduled to begin," adding, "The resulting product mix improvement will contribute to defending profitability."

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