[Click eStock] "Samsung SDI, Focus on US Investment Decision in Second Half"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 950,000 KRW on the 22nd. Although the first-quarter earnings are expected to fall short of previous estimates, further stock price gains are anticipated if an investment decision in the U.S. is made in the second half of the year.

Samsung SDI is estimated to have recorded sales of 2.8262 trillion KRW and an operating profit of 125.8 billion KRW in the first quarter. The operating profit was revised downward compared to previous estimates, reflecting delays in the supply of medium and large-sized batteries related to U.S. ESS. However, the small battery and electronic materials businesses are progressing smoothly. EV batteries are expected to turn profitable from the second quarter of this year, and from the second half, sales are expected to increase significantly, leading to growth in operating profit for EV batteries on an annual basis.

BMW recently announced its future corporate strategy and revealed plans to launch 13 electric vehicle models by 2023. BMW shows little interest in internalizing secondary batteries and is focusing on strengthening strategic partnerships. BMW has been a major customer of Samsung SDI's Gen5 batteries and has consistently used prismatic secondary batteries since the early stages of its electric vehicle business.

Chulhee Cho, a researcher at Korea Investment & Securities, stated, “There is a possibility of jointly developing small batteries with Samsung SDI, and Volkswagen is also preparing for secondary battery standardization centered on prismatic batteries in the mid to long term. Northvolt is the most likely partner, but Samsung SDI will also play an important role alongside Northvolt in targeting the U.S. market as a key supplier of Volkswagen’s prismatic batteries.”

Recently, U.S. electric vehicle startup Rivian signed a secondary battery supply contract with Samsung SDI. Cylindrical batteries are expected to be installed in the pickup trucks and SUVs produced by Rivian. Rivian, invested in by global companies such as Amazon and Ford, is attracting attention as the second Tesla. It is known that Amazon has already placed an order for 100,000 delivery vans from Rivian by 2024.

Samsung SDI is estimated to be the exclusive supplier of small batteries for pickup trucks and SUVs, and if the supply model expands to van models in the future, additional expansion of small batteries will be necessary. Researcher Chulhee Cho said, “From 2025, local factory expansion will be necessary to benefit from U.S. tariffs, and related investment decisions are expected to be made in the second half of the year.”