Samsung SDI rises 5.69% this month... Strong again today
LG Chem also attempts recent reversal
[Asia Economy Reporter Ji Yeon-jin] Secondary battery stocks, which saw their prices plummet after foreign securities firms issued sell reports, are recovering their value.
According to the Korea Exchange on the 18th, Samsung SDI's stock price sharply dropped on the 31st of last month when Morgan Stanley recommended reducing its weighting, but has since shown an upward trend, rising 5.69% until the previous day. On the same day, it also showed strength from the start of trading, recording an intraday increase of over 4%.
Earlier, on the 31st of last month, Morgan Stanley lowered its target price for Samsung SDI to 550,000 KRW along with a recommendation to reduce weighting, citing an expected intensification of competition among battery manufacturers due to a paradigm shift in the electric vehicle (EV) battery industry. As a result of this report, the stock price, which closed at 640,000 KRW on the 28th of last month, fell to 606,000 KRW on the 9th, wiping out more than 2.3 trillion KRW in market capitalization. However, from the 10th of this month, the stock price showed an upward trend for five consecutive days, and after a slight decline due to the impact of the U.S. Federal Open Market Committee (FOMC) mentioning interest rate hikes the previous day, it is rising sharply again on this day.
Kiwoom Securities maintained its target price of 850,000 KRW on the day, expecting strong second-quarter earnings due to the automotive battery turning profitable. Notably, following Morgan Stanley's sell report, the first report from a domestic securities firm included content that overturned the 'sell' logic on Samsung SDI, such as expanding automotive battery supply to major European OEMs (Original Equipment Manufacturers), favorable pricing conditions due to supply and demand of cylindrical batteries, and EV project sales targeting U.S. electric truck companies, which appears to have significantly boosted the stock price. Kim Ji-san, a researcher at Kiwoom Securities, said, "Automakers are prioritizing electric vehicle production to respond to carbon dioxide (CO2) regulations, so automotive batteries are sailing smoothly without major setbacks," and added, "Automotive batteries will lead profit growth in the second half."
LG Chem, whose target price was halved by Credit Suisse (CS) Securities, is also attempting a recent turnaround. LG Chem has risen 1.33% since the beginning of this month. On the 11th, it jumped 5.33% in one day, and recorded an increase of over 3% the previous day as well. On the 25th of last month, CS Securities lowered the target price from 1,300,000 KRW to 680,000 KRW with a sell rating, stating, "Investors have no reason to buy the parent company as LG Energy Solution, LG Chem's battery subsidiary, is about to be listed," causing a market capitalization loss of 4 trillion KRW in one day. The current stock price is about 6% lower than before the sell report.
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