[Click eStock] "Samsung SDI, Valuation Discount Resolved Following Production Capacity Expansion"

[Asia Economy Reporter Kwon Jaehee] NH Investment & Securities maintained its 'Buy' rating and target price of 1,000,000 KRW for Samsung SDI on the 16th.

Samsung SDI's third-quarter earnings are expected to show sales of 5.3 trillion KRW and operating profit of 501.8 billion KRW, representing increases of 54% and 34% respectively compared to the same period last year. This surpasses market consensus by 1% and 6%, respectively. The earnings are expected to be driven by exchange rate effects (7.5 billion KRW in quarterly operating profit per 10 KRW change), price increases, and expanded sales to BMW and Rivian. Rivian, which is driving growth in cylindrical batteries, produced 6,954 units in the first quarter of this year, but production is expected to rise sharply to 18,000 units in the second quarter. Shipments of Gen5 batteries to BMW are also maintaining steady growth, and ESS batteries are expected to see significant profitability improvements in the third quarter due to price hikes.

In the fourth quarter, operating profit is forecasted to reach 594 billion KRW, exceeding consensus by 16%, thanks to the effects of new plant operations.

Production capacity is also expected to expand from 84 GWh in 2022 to 123 GWh in 2024. Cylindrical batteries will primarily expand in Malaysia, while medium-to-large prismatic batteries will focus on the second plant in Hungary. Since Rivian, a major customer for cylindrical batteries, has established a joint venture with Mercedes-Benz for electric van production in Europe, there is potential for additional production capacity expansion for cylindrical batteries, although details are not yet finalized.

Juminwoo, a researcher at NH Investment & Securities, analyzed, "As capacity expansion centered on Malaysia and Hungary continues, the valuation discount compared to competitors is expected to be gradually resolved."

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