[Click e-Stock] "Samsung SDI Needs to Expand Medium-to-Long-Term Earnings Visibility... Target Price Cut"

On July 20, Shinhan Investment Corp. stated that in order for a revaluation of Samsung SDI's stock price, it is necessary to strengthen medium- to long-term earnings visibility, and thus revised its target price down from 800,000 won to 700,000 won. The investment opinion was maintained at 'Buy.'

Jinmyung Lee, a researcher at Shinhan Investment Corp., said, "Despite raising the 2027 earnings estimate by 20%, the target price has been cut by 13% compared to the previous price, reflecting a decline in global peer group multiples (EV/EBITDA from 15 times to 11 times)," adding, "While the solid profitability of the Energy Storage System (ESS) supports a downside in performance, additional ESS orders in North America and increased electric vehicle (EV) utilization rates are essential to expand medium- to long-term earnings visibility and restore valuation multiples."

Samsung SDI is expected to return to profitability in the second quarter of this year. Lee explained, "Operating profit in the second quarter is projected at 14.3 billion won, marking a turnaround to profit for the first time in seven quarters and beating the consensus (the average forecast by securities firms) of an operating loss of 44.9 billion won." He added, "For the medium and large battery segment, sales are expected to decline by 4% quarter-on-quarter to 2.2 trillion won, with operating profit of 59.4 billion won. Although EV batteries are expected to see a slowdown in scale due to the absence of one-off factors from the previous quarter, the sale of products from the U.S. joint venture to Europe and the expansion of Advanced Manufacturing Production Credit (AMPC) will help narrow losses. For the ESS segment, growth will be limited due to the postponement of domestic project deliveries, but substantial profit growth is anticipated thanks to increased sales of uninterruptible power supply (UPS) systems and U.S. tariff refunds."

The small battery segment is expected to see sales growth and a reduction in losses, driven by strong demand for battery backup units (BBU) and power tools, while the electronic materials division is projected to achieve sales and profit growth from higher semiconductor material shipments and the easing off-season for organic light-emitting diode (OLED) materials.

Beginning with the turnaround to profitability in the second quarter, the full-scale recovery phase is forecast to continue in the second half of the year. Lee stated, "In the second quarter, tariff refunds and a recovery in small battery demand will drive the operating profit rebound, but starting in the third quarter, recovery of the core business is expected with higher EV utilization rates in Europe and the expansion of ESS sales. Considering the operation of the North American LFP (lithium iron phosphate) battery facility and further expansion of AMPC in the fourth quarter, the trend of quarterly profit increases is likely to remain valid."

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