Shinyoung Securities said on the 24th that Samsung SDI(006400) has made its funding concrete for expanding production capacity (CAPA) of North American energy storage system (ESS) batteries by selling equity in Samsung Display (SDC). It kept its "buy" investment opinion and its target price of 700,000 won unchanged. The previous trading day's closing price was 478,000 won.
Previously, Samsung SDI disclosed the sale of equity it holds in Samsung Display worth about 4.45 trillion won (5%). The transaction date is the 27th, and after the sale, the ownership ratio will fall to 10.2% from 15.2%.
Park Jin-su, a Shinyoung Securities researcher, said, "Part of the funds raised through this equity sale will be used to repay borrowings, and most will be used for expansion investment in 'SDI-GM Synergy Cells,' which had been a joint venture (JV) with GM."
On the 14th, Samsung SDI said it would acquire all of GM's equity (49.99%) in the JV and convert it into a standalone company.
Park said, "After the conversion to a standalone company, the entity is expected to concurrently introduce a lithium iron phosphate (LFP) prismatic ESS battery line, with mass production estimated to begin in the second half of 2028," adding, "Of the entire lines, the ESS battery line is expected to have a capacity of more than 20 gigawatt-hours (GWh)."
Samsung SDI's North American ESS battery CAPA is expected to increase from about 30 GWh at the end of this year to more than 50 GWh by the end of 2028. Park noted that attention should be paid to mid- to long-term growth rather than short-term earnings pressure.
Park said, "With the equity sale, equity-method gains from affiliates will decrease to about two-thirds of the previous level, but the scale and profit growth potential of the new lines, which will ramp up after 2028, will more than offset this," adding, "As the company shifts to a standalone structure, it is also positive that profits from produced batteries can be recognized as 100% net income attributable to controlling shareholders."