[Click eStock] "Samsung SDI, Mid- to Long-Term Expansion of Electric Vehicle Battery Production Capacity"

Stellantis, the 3rd Largest US Automaker, Signs MOU to Establish Electric Vehicle Battery Joint Venture
KB Securities Maintains Samsung SDI Target Price at 950,000 KRW

[Asia Economy Reporter Gong Byung-sun] Samsung SDI has established a joint venture for electric vehicle batteries with Stellantis, the third-largest automaker in the United States, and has begun targeting the North American market. Through this joint venture, it is expected that the mid- to long-term production capacity of electric vehicle batteries will be expanded.

According to KB Securities on the 20th, Samsung SDI signed a memorandum of understanding (MOU) with Stellantis to establish an electric vehicle battery joint venture in the United States. Although the specific investment amount and production capacity of the joint factory were not disclosed, considering the establishment of the joint venture, it is estimated that an investment worth trillions of won has been made.

Until now, Samsung SDI's commitment to expanding production capacity had been doubted. Although it supplied electric vehicle batteries to Jeep under Stellantis, unlike competitors, it had not presented investment plans to establish battery production plants in the United States.

However, with this decision, Samsung SDI is interpreted to be expanding its mid- to long-term electric vehicle battery production capacity. Lee Chang-min, a researcher at KB Securities, explained, "The average annual production capacity growth rate is expected to reach 30% over the next five years," adding, "Investment in the North American market is gradually expanding, including the expected establishment of a cylindrical battery joint factory with Rivian."

Meanwhile, Samsung SDI's sales for the third quarter of this year are estimated at 3.61 trillion won, a 17% increase compared to the same period last year, and operating profit is estimated at 343.4 billion won, a 28% increase during the same period. Due to the shortage of automotive semiconductors, the production volume of customers' plug-in hybrid electric vehicle (PHEV) models decreased. However, the price increase and demand growth of cylindrical batteries, as well as the performance of the electronic materials division including semiconductor materials and organic light-emitting diode (OLED) materials, are expected to expand compared to the previous quarter.

Accordingly, KB Securities maintained its investment opinion of "Buy" on Samsung SDI with a target stock price of 950,000 won. The closing price on the previous day was 727,000 won.