Kyobo Securities said on the 30th that although Samsung SDI's earnings in the first quarter this year are expected to be the lowest of the year, the recent share price trend is positive despite industry weakness. It maintained a Buy rating and raised its target price to 580,000 won from 420,000 won. Samsung SDI's previous trading day closing price was 405,500 won.
Choi Bo-young, an analyst at Kyobo Securities, said, "As weakness in the electric vehicle (EV) market continues, improvements in the financial structure and investment driven by the sale of equity in Samsung Display, as well as expectations for a shift to energy storage systems (ESS) and for solid-state batteries and robots, are being reflected in the share price," adding, "Among Korea's large-cap secondary battery stocks, it is showing a relatively strong share price trend."
Specifically for ESS, some EV lines are being converted to ESS, driving changes in the production structure, and orders are being secured mainly on a project basis, it analyzed. In particular, it viewed the division as establishing itself as a relatively stable profitability base compared with autos due to higher unit prices.
For small batteries, it analyzed that demand is recovering, centered on power tools. Use of power tools is increasing with the expansion of global infrastructure investment and the recovery in construction and remodeling demand, and shipments are expected to rise in the second to fourth quarters on the back of growing infrastructure demand from data center expansion. For medium and large batteries, restructuring is underway, including reductions and conversions of lines at the Hungary plant, as demand weakness persists, centered on European original equipment manufacturers (OEMs).
Choi said, "Earnings are expected to bottom in the first quarter, but some signs that the trough is passing are being confirmed as the loss in the fourth quarter last year narrowed from the previous quarter."
Samsung SDI's first-quarter revenue is estimated at 3.4943 trillion won, with an operating loss of 268.6 billion won. Revenue is expected to fall 10% from last year, and the operating loss is expected to continue. However, both revenue and operating loss are expected to slightly beat market expectations of 3.4 trillion won and 280.9 billion won.
Choi said, "Future investment points are a higher utilization rate at ESS and strengthening of the lithium iron phosphate (LFP) value chain, while for small batteries we can expect a recovery in end-market demand from power infrastructure investment for artificial intelligence (AI) data centers and an expanded customer base for humanoids, which require high-output characteristics."