[Click eStock] SL "Electric Vehicle LED Lamp Sales Increase... Strong Performance Continues"

[Asia Economy Reporter Ji Yeon-jin] Samsung Securities announced on the 17th that it has raised the target stock price of SL from the previous 35,000 KRW to 40,000 KRW, citing an earnings surprise due to increased lamp sales and reduced losses at its U.S. factory.

Although the company's finished car production in the first quarter decreased by 6.9% compared to the same period last year, sales recorded an all-time high. This was due to an increase in the average selling price resulting from the increased adoption of LED lamps. Last year, the net profit margin was -5.5%, marking the largest deficit ever, caused by logistics costs and fixed cost burdens due to low operating rates.

In the first quarter of this year, sales reached 238.1 billion KRW, a 34% increase year-on-year, and the net profit margin was recorded at -0.2%. This was influenced by a reduction in logistics costs as some inventory shortages were resolved. From the second quarter, with the recovery of production in the U.S. by Hyundai Motor, Kia, and GM, SL's U.S. factory (accounting for 26.8% of sales) is expected to turn profitable, offsetting sluggishness in China. Although semiconductor and other parts procurement issues are expected to continue until next year, Hyundai Motor started weekend overtime at its domestic factories from the 14th.

SL supplies LED lamps to six electric vehicle models from Hyundai Motor and Kia being released this year. Additionally, except for the G80, it supplies LED lamps to all Genesis models, positioning it as a beneficiary of Genesis's full electric vehicle transition after 2025.

Furthermore, joint investment is expected with Hyundai Motor's U.S. electric vehicle factory construction, and there is no burden from new factory investments. In 2024, SL is expanding its business with new product lines by supplying electric vehicle battery management systems (BMS) to Kia in the European market. Among parts suppliers, SL has the second-largest financial capacity after Hyundai Mobis, indicating no burden on new factory investments and new product development even in an inflationary environment.

Researcher Lim Eun-young of Samsung Securities said, "Strong performance is expected to continue with the U.S. factory turning profitable from the second quarter," adding, "The Hyundai Motor U.S. electric vehicle factory and Hyundai Motor Group's BMS supply in Europe, along with customer diversification, will be momentum."