[Click eStock] "Samsung SDI, Urgent Need for Recovery in Small Battery Market and Cost Improvement"

On the 1st, Korea Investment & Securities analyzed Samsung SDI, stating, "Since solid-state batteries will be mass-produced from the second half of 2027, it is crucial at present to recover the small battery market and reduce the burden of research and development expenses." The investment opinion was 'neutral,' and no target price was presented.

Samsung SDI plans to mass-produce solid-state batteries for electric vehicles starting in the second half of 2027. If successful, it will become the first battery company in the world to mass-produce solid-state batteries. Domestic competitors have plans to begin mass production in 2030. Analyst Choi Moon-sun said, "It is currently uncertain whether solid-state batteries will be mass-produced on schedule, earlier, or later," adding, "It is too early to make investment decisions based on this."

Last year, the operating rate of small batteries fell from 76.1% in the second quarter to 51.4% in the third quarter, and further dropped to 39.3% in the fourth quarter. During the COVID-19 lockdown period, the time spent at home increased, leading to an explosive demand for power tools for home repairs, but now a strong balloon effect is appearing. He pointed out, "The sluggish sales of electric vehicles are a problem, but the deficit caused by the low operating rate of small batteries is also an issue."

Excessive research and development expenses are also a concern. Samsung SDI spent 1.2975 trillion won on research and development last year, which is 3.6 times its operating profit of 363.3 billion won. In 2023, it spent 1.0985 trillion won on research and development, which was 71% of the operating profit at that time. The sharp decline in operating profit last year increased the burden of research and development expenses. Reducing R&D expenses poses a dilemma as it could delay the mass production of next-generation batteries.

Korea Investment & Securities assumed this year's research and development expenses to be 871 billion won, which is 5% of sales. While continuing investments for the future, it is expected to partially reduce expenses considering the sluggish market conditions.