Samsung Securities projected that Samsung SDI's performance in the second quarter of this year will fall short of market expectations (consensus). The analysis suggests that improvements in performance may take some time, as the increase in shipments of mid-sized and large electric vehicle batteries remains in single digits. The target stock price has also been downgraded from 270,000 won to 220,000 won. The investment opinion is maintained as 'buy.'
Seo Ji-hyun, a researcher at Samsung Securities, noted that "shipments to key European customers in the mid-sized and large electric vehicle sector are expected to decrease more than anticipated" and explained, "Shipments to the U.S. joint venture with Stellantis are also expected to drop by 41%, and the Advanced Manufacturing Production Tax Credit (AMPC) is expected to be lower than the estimate of 108 billion won, at 67 billion won."
However, it seems difficult to see an improvement in the second quarter, making an annual operating loss unavoidable. Samsung Securities forecasted that Samsung SDI's annual performance this year will see revenue of 15.4 trillion won with an operating loss of 887 million won.
However, there remains the possibility of demand recovery in the small battery institutional sector after the inventory adjustments by tool customer companies. The potential addition of battery backup units (BBU) for data centers is also a positive sign. In the second half of the year, the construction of an all-solid-state production line is also scheduled. The completion of the line and the ability to respond with samples is expected in the first half of next year.
Seo noted that "there is a significant possibility it will operate at a premium compared to competitors in the market" and assessed that "the diversification strategy of rectangular form factors by customers in Europe and North America is expected to lead to increased orders in the future."