Samsung Securities on the 22nd said demand from electric vehicle (EV) customers is weak, so next year's annual results for Samsung SDI will likely fall short of market expectations. It lowered its target price to 320,000 won from 350,000 won while maintaining a buy rating. Samsung SDI's previous session closing price was 277,000 won.
Samsung Securities estimated that in the fourth quarter of this year Samsung SDI will post revenue of 3.4 trillion won and an operating loss of 374.5 billion won. That is worse than the market consensus for an operating loss of 253.5 billion won.
In the automotive battery segment, compensation reflecting weak demand from a customer that was deferred from the third quarter is expected to be recognized, but provisions related to recalls for some original equipment manufacturer (OEM) clients will likely be higher than expected, limiting the improvement in losses. Meanwhile, energy storage systems (ESS) are expected to grow 40% quarter over quarter and turn to profit.
Next year's outlook is compiled at revenue of 14.8 trillion won and operating profit of 329.1 billion won.
Jang Jeong-hoon, an analyst at Samsung Securities, said, "The electronic materials and ESS segments, which are in good shape, will maintain profitability, and the scale of the Advanced Manufacturing Production Credit (AMPC) is also expected to grow," but added, "Sales in the automotive battery segment and the small battery segment are weaker than expected, making a quarterly turnaround to profit difficult and limiting the improvement in the annual loss."
He continued, "In the automotive battery shipment business, demand from BMW, a key customer, appears set to decline," adding, "Thanks to factors such as Hyundai Motor's launch of new models equipped with high-nickel batteries, expectations for annual shipment growth remain."