[Click eStock] Samsung SDI, Strong 3Q Performance Amid Cylindrical Battery Boom

3Q Operating Profit Expected to Surpass 350 Billion Won
Small Batteries and Electronic Materials 'Hold Strong' Despite Semiconductor Supply Shortage

[Asia Economy Reporter Minwoo Lee] Samsung SDI is expected to post solid earnings in line with market expectations for the third quarter of this year. Although automotive batteries are inevitably affected by the semiconductor supply shortage, it is analyzed that small batteries and electronic materials performed better than expected.

On the 27th, Kiwoom Securities upgraded Samsung SDI's investment rating to 'Buy' based on this background. The target price was maintained at 900,000 KRW. The closing price on the previous trading day was 726,000 KRW.

Kiwoom Securities forecast that Samsung SDI will record consolidated sales of 3.5321 trillion KRW and operating profit of 354.1 billion KRW in the third quarter of this year. This represents increases of 14.4% and 32.4%, respectively, compared to the same period last year. The operating profit is also expected to slightly exceed the market consensus of 349.4 billion KRW. Ji-san Kim, a researcher at Kiwoom Securities, explained, "Although automotive batteries will inevitably face some sales disruptions due to the semiconductor supply shortage, small batteries and electronic materials performed better than expected. Favorable exchange rate conditions will also provide support."

Automotive batteries are expected to see a decrease in plug-in hybrid electric vehicle (PHEV) volumes as European customers experience production disruptions while focusing on electric vehicle (EV)-centered strategies. However, some sales may be deferred, potentially leading to an expanded sales increase in the fourth quarter. Electric vehicle sales in Europe in July and August increased by only 48% year-on-year, significantly below the global average of 115%.

Small batteries showed a notable boom in cylindrical batteries. Strong demand continues in power tools, mobility, and electric vehicles, combined with price increases, resulting in high profitability. Samsung SDI is actively responding by expanding mainly the 21700 standard and is also pursuing diversification of electric vehicle customers.

Electronic materials are also expected to show favorable results. Researcher Kim predicted, "High-value OLED materials are performing well, supported by new smartphone product launches and diversification of applications such as laptops. Despite concerns about a slowdown in demand for polarizing films due to reduced contact (untact) demand, they are expected to achieve solid results at the previous quarter's level."

As profits from automotive batteries increase, Samsung SDI's operating profit is expected to continue its upward trend. Researcher Kim emphasized, "The entry of automotive batteries into the U.S. market is imminent. The boom in cylindrical batteries is likely to continue until next year, and the proportion of electric vehicle sales will continue to expand. OLED materials will also broaden into new areas, highlighting growth potential."