[Click eStock] "Samsung SDI, Poor Performance Expected Until Q1 This Year... Target Price Down"

Target Price Downgraded from 500,000 Won to 320,000 Won

On the 6th, KB Securities downgraded the target price of Samsung SDI from 500,000 KRW to 320,000 KRW, anticipating inevitable short-term earnings weakness. The investment rating was maintained at 'Buy.'

Lee Chang-min, a researcher at KB Securities, explained, "The reason for lowering the target price is due to the assumption of a slowdown in demand from front-end customers caused by political variables in the US and Europe, leading to a 48% downward revision of this year's operating profit estimates."

Samsung SDI's fourth-quarter earnings last year are expected to fall significantly short of market expectations. The researcher stated, "The fourth-quarter results are estimated at 3.19 trillion KRW in sales, down 43% year-on-year, and an operating loss of 259 billion KRW, which will significantly underperform the consensus operating profit estimate of 127.9 billion KRW. While the energy storage system (ESS) battery sector remains favorable as initially expected, the small battery segment, which serves power tools and electric vehicles (EVs), continues to show weak demand. Additionally, fixed cost burdens are increasing due to intense inventory adjustments by major European EV battery customers, and one-time costs related to EV battery recalls and obsolete inventory write-offs are estimated to exceed 100 billion KRW," he analyzed.

The earnings slump is expected to continue through the first quarter of next year. The researcher noted, "It is regrettable that the visibility of demand from Europe has also diminished, in addition to the previously significant concerns about the US market (fears of the Trump administration's second term abolishing EV support policies). This is because the carbon emission regulations, initially scheduled to be enforced in 2025, have been relaxed, weakening the urgency for European automakers to accelerate EV production."

However, competition intensity is expected to ease. The researcher predicted, "The bankruptcy of competitors such as Northvolt is leading to a reduction in competitive pressure, and Samsung SDI, supported by its technological capabilities, could become the market winner in the mid to long term."

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