[Click eStock] "Samsung SDI, North America Battery New Plant Expansion Becomes Visible"

[Asia Economy Reporter Son Sunhee] Hi Investment & Securities maintained a 'Buy' rating on Samsung SDI on the 4th but lowered the target price to 820,000 KRW. The company explained that although there is a high possibility of expanding the new battery plant in North America and steady performance growth is expected this year, the valuation of growth stocks such as secondary batteries is generally declining due to increasing macroeconomic uncertainties.

Samsung SDI's estimated Q4 performance last year was 6 trillion KRW in sales and 484 billion KRW in operating profit. This represents growth of 57% and 82% respectively compared to the same period last year but falls short of market expectations (6 trillion KRW in sales, 610.9 billion KRW in operating profit).

Researcher Jeong Wonseok of Hi Investment & Securities cited three main reasons for the poor performance. He explained, "Due to the expansion of macro uncertainty, shipments of cylindrical batteries for power tools, which are sensitive to the economy, were sluggish," and "As demand for TVs and IT products declined, major panel companies continued to adjust their operating rates, leading to a decrease in demand in the polarizing film sector." He added, "It was also due to exchange rate changes caused by the strong won and the reflection of one-time bonuses." As a result, it is speculated that the performance of the small battery and electronic materials sectors will fall short of expectations.

However, Researcher Jeong evaluated positively that "shipments of mid-to-large automotive batteries, which are in the peak season, remain steady due to strong electric vehicle sales from SDI's main customers such as BMW and Volkswagen."

Hi Investment & Securities forecast that despite this, Samsung SDI's performance growth will continue this year, supported by the growth of the premium electric vehicle market. In particular, they expect the penetration rate of electric vehicles in regions such as the U.S. and Europe to continue rising. In addition to existing major customers, it is known that joint ventures are being discussed with GM and Volvo in the U.S. Accordingly, sales and operating profit this year are expected to grow 26% and 25% respectively from last year, reaching 25.4 trillion KRW and 2.25 trillion KRW.

Researcher Jeong said, "Among global automakers, the only domestic three companies that battery cell manufacturers can choose to produce electric vehicles that meet the U.S. Inflation Reduction Act (IRA) are the domestic three companies," and "There is a very high possibility that another partnership (joint venture establishment, long-term supply contract, etc.) will be established targeting operation in 2025-2026."

He also added, "Although there are concerns in the market about electric vehicle demand due to the recent economic slowdown in Europe, SDI is expected to show gradual performance growth centered on premium products," and "In particular, SDI, which has shown the most conservative stance on capacity expansion among the three domestic battery cell companies so far, is judged to have a high possibility of creating new momentum as its purchasing negotiation power increases due to the implementation of the U.S. IRA law in 2023, showing active willingness for new orders."

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