[Click eStock] "Samsung SDI, 3Q Earnings Slump... Target Price Down"
Korea Investment & Securities lowered the target price for Samsung SDI by about 24%, from the previous 1.05 million KRW to 800,000 KRW on the 5th. The investment rating was maintained at 'Buy.'
Samsung SDI is estimated to record sales of 5.9 trillion KRW and an operating profit of 488.8 billion KRW in the third quarter. Compared to the same period last year, sales increased by 10.5%, but operating profit decreased by 13.6%. It is expected to underperform market expectations. While medium-to-large batteries (EV, ESS) performed well, deliveries of small batteries for power tools were lower than expected due to a sluggish construction market. Since cylindrical batteries for power tools have the highest operating profit margin among product groups, the third-quarter operating profit is analyzed to fall short of market expectations.
However, Korea Investment & Securities estimated that Samsung SDI's delivery performance of batteries for electric vehicles (medium-to-large and small) is better than that of competitors. Automotive OEMs are delaying parts purchases, anticipating a more significant drop in secondary battery prices than expected (due to raw material price declines), highlighting the performance stability of Samsung SDI, which has a relatively high proportion of high-end customers. The third-quarter medium-to-large battery performance is expected to show sales of 3.4 trillion KRW and operating profit of 249 billion KRW, increasing by 3.1% and 29.7%, respectively, compared to the previous quarter.
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Cholhee Jo, a researcher at Korea Investment & Securities, said, "Reflecting the weak demand for power tools and the decline in secondary battery prices, we lowered the operating profit estimates for this year and next year by 6.5% and 10.9%, respectively," but added, "The second half of this year is the bottom of the market, and based on joint ventures with Stellantis, GM, etc., in the U.S., sales and operating profit are expected to increase rapidly from 2025, so we maintain a buy rating."
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