Battery Leader's 'Reasoned Sprint'

Electric Vehicle Rally Heats Up... LG Chem and Samsung SDI Rise Consecutively

[Asia Economy Reporter Eunmo Koo] As the electric vehicle market accelerates its growth, the stock prices of Korea's leading battery companies continue to rise day by day.

According to the Korea Exchange on the 8th, Samsung SDI's stock price closed at 391,000 KRW, up 0.77% (3,000 KRW) from the previous trading day. During the session, it reached 403,500 KRW, setting a 52-week high and surpassing the 400,000 KRW mark for the first time ever. Samsung SDI had stalled with only a 1.3% increase last month, but has risen 7.5% over five trading days this month. LG Chem also continued its six consecutive days of gains, hitting a new intraday high and closing at 516,000 KRW, up 1.38% (7,000 KRW) from the previous day.

The surge in Tesla shares in the U.S. stock market fueled the electric vehicle battery stocks. On the 6th (local time), Tesla closed at 1,371.58 USD on the Nasdaq, up 13.5% (162.92 USD) from the previous day. Tesla’s stock price has risen 44.8% over the past six trading days, showing strong momentum. Jeong Yoon Moon, a researcher at KTB Investment & Securities, said, "In the second quarter of this year, Tesla’s electric vehicle deliveries increased by 2.5% from the first quarter to 90,650 units, exceeding market expectations mainly due to Model 3, despite the impact of COVID-19. If Tesla records a profit in the second quarter, it will meet the eligibility criteria for inclusion in the Standard & Poor’s (S&P) 500 index, and the upward trend in stock price is expected to continue upon inclusion."

Expectations for the electric vehicle market in the second half of the year are also growing. Soonhak Lee, a researcher at Hanwha Investment & Securities, forecasted, "The supply of automotive batteries will significantly increase in line with the new car cycles of European automakers," adding, "Automotive batteries are expected to turn profitable starting from the third quarter." Additionally, the smartphone market is recovering as economic activities resume, which could improve the performance of the small battery segment. Lee predicted, "Assuming the electric vehicle market grows substantially, the performance momentum will be maximized next year."

Moreover, a series of 'electric vehicle meetings' led by Chung Euisun, Vice Chairman of Hyundai Motor Group, has also boosted the atmosphere. Vice Chairman Chung concluded the summit of the heads of Korea’s top three battery companies with SK Group Chairman Chey Tae-won yesterday. Analysts say that the three meetings by Vice Chairman Chung served as an opportunity to strengthen collaboration between Hyundai Motor Group and the three domestic battery companies and to confirm each company’s battery technology competitiveness.

Earlier, Hyundai Motor announced plans to sell 850,000 electric vehicles annually by 2025 based on the group’s total sales. Considering the current group sales volume of about 7 million units, the pure electric vehicle ratio needs to reach 12%, and the eco-friendly vehicle ratio including hybrids must reach 25%.

The second-quarter earnings of the two companies are expected to diverge. According to financial information provider FnGuide, LG Chem’s operating profit for the second quarter is estimated at 366.8 billion KRW, a 37.1% increase compared to the same period last year, with sales revenue rising 1.8% to 7.3062 trillion KRW. On the other hand, Samsung SDI’s operating profit is expected to decline 61.7% to 60.3 billion KRW, and sales revenue is projected to grow only 1.0% to 2.4279 trillion KRW during the same period. However, with improved performance in the second half, the annual operating profit is analyzed to grow 30.0% to 599.9 billion KRW.