[Click eStock] "Samsung SDI, a Representative Undervalued Stock in the Industry"

On the 12th, KB Securities referred to Samsung SDI as a "representative undervalued stock within the industry." Lee Chang-min, a researcher at KB Securities, stated, "If the stock price rebound of the secondary battery sector materializes in the second half of the year, Samsung SDI's stock price is also expected to follow an upward trajectory."

The researcher maintained a buy rating but lowered the target price by 15%, from the previous 650,000 KRW to 550,000 KRW. He explained, "The reason for lowering the target price is due to the downward revision of the projected average annual growth rate of Samsung SDI's medium-to-large EV battery sales over the next seven years from 15.4% to 13.8%, considering the slowdown in European electric vehicle demand."

Samsung SDI's second-quarter earnings are estimated at 5.05 trillion KRW in sales and 317.3 billion KRW in operating profit, expected to fall short of consensus. The improvement in ESS battery performance compared to the previous quarter and the inclusion of an estimated 120 billion KRW compensation due to under-delivery of orders from small battery customers are seen as positive factors.

However, as the medium-to-large battery performance for EVs is expected to contract compared to the previous quarter, the overall second-quarter company performance is anticipated to miss consensus. The medium-to-large batteries for EVs are projected to see a 5% decrease in average selling price and a 6% decline in shipment volume, reflecting a delayed impact of the drop in lithium prices.

The researcher analyzed, "Although Samsung SDI has successfully defended its performance against competitors for a long time, it is expected that from the second quarter onward, it will not be able to avoid the impact of sluggish upstream demand." He added, "With the likelihood of a US interest rate cut within this year increasing, the profitability is expected to improve starting in 2025 due to the full-scale effect of tax credits received from the operation of the US factory, which is a positive factor."