[Click eStock] "Samsung SDI, Upward Profit Trend in Second Half... Target Price Up, Investment Opinion Down"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities on the 28th forecasted that Samsung SDI's upward profit trend will continue in the second half of the year and raised the target stock price from the previous 850,000 KRW to 900,000 KRW. However, considering the limited upside potential, the investment rating was lowered from 'Buy' to 'Outperform'.

Samsung SDI posted better-than-expected results in the second quarter. Ji-san Kim, a researcher at Kiwoom Securities, said, "Samsung SDI's operating profit in the second quarter recorded 295.2 billion KRW, a 184% increase compared to the same period last year, significantly exceeding market expectations (256.1 billion KRW). Most notably, the automotive battery segment successfully turned profitable due to expanded supply to Europe, and the profitability of electronic materials, led by polarizing films, exceeded expectations."

In the cylindrical battery segment, sales from new electric vehicle (EV) projects began amid tight supply conditions. Although the energy storage system (ESS) segment faced logistics disruptions, sales increased significantly, mainly in the North American power sector, and profitability turned positive again. All electronic materials sectors improved: polarizing films benefited from strong demand for large LCD TVs, semiconductor materials improved due to increased wafer input, and OLED materials improved with rising smartphone demand.

In the second half of the year, the profit contribution from automotive batteries is expected to accelerate, continuing the upward profit trend. However, it is suggested to lower expectations for the third quarter and raise them for the fourth quarter. Researcher Kim explained, "Operating profit for the third quarter is estimated at 314 billion KRW, a 17% increase compared to the same period last year. Automotive batteries will see an improved product mix as sales of high-margin Gen3 and above projects expand, and Gen5 battery supply will begin at the Hungary base. However, ESS sales are expected to temporarily decline in the third quarter due to the sales recognition schedule." Among electronic materials, polarizing films will inevitably face demand slowdown due to reduced untact (non-face-to-face) demand and price declines, but semiconductor and OLED materials are expected to defend profitability.

Researcher Kim added, "It is important to pay attention to the automotive battery's entry into the U.S. market, diversification of cylindrical battery EV customers, and the performance of new electronic materials businesses."